The news hit sentiment toward the sector, and sent shares in the UK nationalised banks to the bottom of the FTSE 100.

Overall, London’s benchmark index fell 48 points to 5,194.25, a loss of 0.9 per cent. Lloyds Banking Group was its biggest single casualty, down 6.3 per cent to 90.2p. Royal Bank of scotland fell 5.1 per cent to 44.7p.

Shares have lost some direction over recent weeks as investors have started to worry that the gains seen since the first part of the year have got ahead of the economic recovery.

Cable and Wireless was 3.3 per cent higher at 145.7p, the best single performer on the FTSE 100.

British Airways was lower on news that European regulators were considering forcing the sale of take-off and landing slots should its transatlantic tie-up with American Airlines and Spain’s Iberia go ahead. Shares in BA lost 2.4 per cent to 204.8p.

Shares in McBride topped the FTSE 250 after the maker of own-label branded goods for supermarkets said it had performed ahead of expectations in the first half. The stock rose 10.9 per cent to 221.2p..

As confidence in the prospect for a swift and sustained global economic rebound faltered, mining stocks lost intraday gains. Among them, Kazakhmys was 2.3 per cent weaker at £12.65.