By Simon Falush
The FTSE 100 closed down 31.52 points at 4,059.88 points, bringing the losses for the month to 8.4 percent after it fell over 30 percent last year.
Bank stocks, which were heavily sold in recent sessions, were generally higher but Barclays shares slid 9.3 percent, having earlier lost a third in value to a 24-year low, dogged by the threat it needs to raise funds or could be nationalised.
The UK banking index is down 31.7 percent already this year, having plunged by more than 50 percent in 2008.
"There's a hell of a lot of pressure on the banking sector," said Tom Hougaard, chief market analyst at CMC Markets in London.
"There's very little buying interest that's sustainable... it's a treacherous market and there's a lot of money exiting our shores."
Sharp moves on financial markets this week risk overshadowing Britain's second bank rescue package, Bank of England policymaker Paul Tucker said Wednesday.
Britain announced measures Monday to let banks insure themselves against losses from their riskiest assets as part of a package to get lending flowing in the economy, having already recapitalised the banking system in October.
The chairman of the Treasury Committee has urged the government to nationalise Royal Bank of Scotland and Lloyds as the global financial crisis deepens.
While Barclays was once again heavily under pressure, other banks recovered slightly from heavy falls seen over recent sessions.
RBS, which has been hammered in recent days, clawed back 21 percent to trade at 12.2 pence.
Standard Chartered and HSBC gained 11.1 and 6.3 percent respectively while Lloyds Banking Group eked out a 0.7 percent rise.
Energy stocks took the most points off the index as gloom on the global economy added to conviction that the outlook for oil consumption will be bleak.
BP, Royal Dutch Shell and BG Group fell between 1.8 and 3.2 percent.
BOE MINUTES
The Bank of England's Monetary Policy Committee voted 8-1 to cut interest rates by 50 basis points to a record low of 1.5 percent this month, according to minutes from the Jan 7-8 meeting, with arch-dove David Blanchflower calling for a reduction of 100 bps.
Bank of England Governor Mervyn King said the economy will likely shrink markedly in the first half of 2009 and policymakers need to think about using more than just interest rates to stimulate demand.
Meanwhile, the number of Britons claiming unemployment benefit rose for an 11th consecutive month in December while the total number out of work surged close to the 2 million mark, official data showed.
U.S. stocks edged higher with the Dow Jones industrial average up 1 percent Wednesday after Wall Street ushered in the Barack Obama presidency with a record Inauguration Day drop Tuesday as conviction grew that the global bank crisis was far from over.
"Investors were expecting some sort of Obama bounce but, for the time being, we're not seeing it," said Keith Bowman, strategist at Hargreaves Lansdown.
Miners were generally higher, recovering slightly from hefty recent losses even as prices dropped. Anglo American, Eurasian Natural Resources and Xstrata gained between 0.7 and 6 percent.
But BHP Billiton shed 1 percent following news the miner will cut some 6 percent of its workforce, and close its giant Ravensthorpe nickel mine in Australia with a $1.6 billion (1.1 billion pounds) writedown, its biggest in nine years.
ICAP, Imperial Tobacco and Pennon Group all fell after going ex-dividend.
(Additional reporting by Rebekah Curtis; Editing by David Cowell)
LONDON (Reuters)
The FTSE 100 closed down 31.52 points at 4,059.88 points, bringing the losses for the month to 8.4 percent after it fell over 30 percent last year.
Bank stocks, which were heavily sold in recent sessions, were generally higher but Barclays shares slid 9.3 percent, having earlier lost a third in value to a 24-year low, dogged by the threat it needs to raise funds or could be nationalised.
The UK banking index is down 31.7 percent already this year, having plunged by more than 50 percent in 2008.
"There's a hell of a lot of pressure on the banking sector," said Tom Hougaard, chief market analyst at CMC Markets in London.
"There's very little buying interest that's sustainable... it's a treacherous market and there's a lot of money exiting our shores."
Sharp moves on financial markets this week risk overshadowing Britain's second bank rescue package, Bank of England policymaker Paul Tucker said Wednesday.
Britain announced measures Monday to let banks insure themselves against losses from their riskiest assets as part of a package to get lending flowing in the economy, having already recapitalised the banking system in October.
The chairman of the Treasury Committee has urged the government to nationalise Royal Bank of Scotland and Lloyds as the global financial crisis deepens.
While Barclays was once again heavily under pressure, other banks recovered slightly from heavy falls seen over recent sessions.
RBS, which has been hammered in recent days, clawed back 21 percent to trade at 12.2 pence.
Standard Chartered and HSBC gained 11.1 and 6.3 percent respectively while Lloyds Banking Group eked out a 0.7 percent rise.
Energy stocks took the most points off the index as gloom on the global economy added to conviction that the outlook for oil consumption will be bleak.
BP, Royal Dutch Shell and BG Group fell between 1.8 and 3.2 percent.
BOE MINUTES
The Bank of England's Monetary Policy Committee voted 8-1 to cut interest rates by 50 basis points to a record low of 1.5 percent this month, according to minutes from the Jan 7-8 meeting, with arch-dove David Blanchflower calling for a reduction of 100 bps.
Bank of England Governor Mervyn King said the economy will likely shrink markedly in the first half of 2009 and policymakers need to think about using more than just interest rates to stimulate demand.
Meanwhile, the number of Britons claiming unemployment benefit rose for an 11th consecutive month in December while the total number out of work surged close to the 2 million mark, official data showed.
U.S. stocks edged higher with the Dow Jones industrial average up 1 percent Wednesday after Wall Street ushered in the Barack Obama presidency with a record Inauguration Day drop Tuesday as conviction grew that the global bank crisis was far from over.
"Investors were expecting some sort of Obama bounce but, for the time being, we're not seeing it," said Keith Bowman, strategist at Hargreaves Lansdown.
Miners were generally higher, recovering slightly from hefty recent losses even as prices dropped. Anglo American, Eurasian Natural Resources and Xstrata gained between 0.7 and 6 percent.
But BHP Billiton shed 1 percent following news the miner will cut some 6 percent of its workforce, and close its giant Ravensthorpe nickel mine in Australia with a $1.6 billion (1.1 billion pounds) writedown, its biggest in nine years.
ICAP, Imperial Tobacco and Pennon Group all fell after going ex-dividend.
(Additional reporting by Rebekah Curtis; Editing by David Cowell)
LONDON (Reuters)
