Toucan

The financial crisis deepened on Friday as panic returned to world markets despite coordinated action to restore confidence.

Moments after opening the FTSE 100 slumped almost ten per cent, mirroring falls on the Dow Jones yesterday and Asian markets overnight.

Although the FTSE 100 dipped below 4,000 points for the time in five years, by 09:00 BST it had rallied slightly.

G7 finance ministers are due to meet later in Washington to discuss the crisis, which has affected stock markets across the world, while US president George Bush is due to address the American public.

In Paris and Germany falls of nine per cent were felt when trading began, with similar slumps witnessed in Tokyo, Australia, Hong Kong, Singapore and India.

Earlier this week world central banks announced a 0.5 percentage point cut in interest rates, while the UK government confirmed a £500 billion bailout of domestic banks.

But the rescue package has done little to reassure traders inthe short-term, with UK banking stocks suffering in early trading this morning.

The market falls come as a delegation of Treasury officials journeys to Reykjavik to hold talks over the collapse of the country's banking system – where millions of pounds of British savings – by both individuals and local authorities – is held.

© Adfero Ltd