Thursday 9 October - afternoon update

Just one day after the biggest-ever bailout of the banks, Goldman Sachs's contribution to global efforts to save the financial system was to damn the UK's battered sector.

The City big-hitter today slashed its price targets for four of the five biggest banks, warning that while the Government's package may unfreeze money markets, uncertainty remains over the terms and type of capital raised.

Goldman cut Barclays from 390p to 250p and Lloyds TSB from 270p to 170p, advising clients to ditch both banks' shares. Royal Bank of Scotland was reduced from 240p to 140p, but with a hold rating on the stock, while it still considers HBOS a buy, but with its target cut from 220p to just 140p.

Société Générale also jumped on the bandwagon, warning that long-term issues remain for the banks. Maintaining an underweight rating on the sector, it warns of a triple whammy of potential problems: balance sheets still need cleaning up, dividend payments could come under pressure and the outlook for UK operations is far from positive.

But investors mostly shrugged off the broker gloom. HBOS again claimed first place on the FTSE 100 leaderboard, climbing 39.1p to 156.1p, substantially above Goldman's target for the shares. There was vague talk that the Halifax owner could be set to ditch its Lloyds TSB merger as the bailout would allow it to survive as an independent entity. But most in the City dismissed the rumour, and said it was simply closing the discount to the value of the Lloyds shares offered in the merger deal.

Proposed partner Lloyds put on 9¼p to 219¼p while rival Royal Bank of Scotland rose 15p to 105.7p. But Barclays, 10¼p cheaper at 268p, was hit by fears there could be liabilities from its takeover of the rump of Lehman Brothers' US operations.

After yesterday's volatile session when the benchmark index ended the day at a four-year low, the FTSE 100 was back in the black, up 68.3 at 4434.99 as a good showing from the heavyweight miners boosted the index.

But it will be little relief to investors who have seen the value of their holdings plummet, with the blue-chips still down almost 11% on the week.

In New York, the one-year anniversary of the Dow's record finish only served to highlight how the tides have turned. The index is now 35% lower than it was 12 months ago, and has fallen 15% in the last six trading days. Today it clawed back some of the losses on opening, up 68.42 at 9,26.52 but trading was volatile and market experts warned intra-day volatility has been frightening away potential buyers.

Banks were not alone in getting a hammering from brokers. In an indication that mining shares really have lost their gleam, Morgan Stanley issued a string of price-target cuts on the former darlings of investors. Fears over falling global demand have led its commodities team to slash their forecasts for metal and iron ore prices. Anglo American was among those out of favour, its target slashed from 4250p to 2250p, but the recent sell-off in its shares and news that it plans to invest in Chinese coal mines helped it climb 124p to 1544p.

As the credit crunch hits consumer spending, even appetites for sausage rolls are waning. Bakery chain Greggs today cut its full-year profit forecasts by £3 million as higher ingredients costs and a weather-related drop-off in sales in August hit earnings. Its shares plunged 169p to 3257p.

Sportswear retailer JJB Sports recovered slightly from yesterday's sell-off where its shares sank to a record low, amid talk that a Middle East buyer could be eyeing the group's lucrative health clubs division. Its shares have crashed more than 90% in the past month but were up 5¼p at 17¼p.

Yesterday's biggest blue-chip casualty despite an upbeat trading statement amid uncertainty over the sell-off of Robert Tchenguiz's 10% stake, gained 7¾p to 275½p.