Alliance & Leicester, the mortgage bank, tumbled to a seven-year low after its rival mortgage lender Bradford & Bingley took a far higher than expected write-off on its exposure to toxic debt.
A&L also has exposure to CDOs and SIVs, whose values have deteriorated massively in the past few weeks, as well as an expensive £4 billion loan from Credit Suisse.
B&B fell 12 per cent to 214.75p while A&L lost 4 per cent to 577p. Since Santander, of Spain, the owner of Abbey National, ruled out bidding for A&L last week, there has been nothing to hold up its share price.
The fellow mortgage bank HBOS, the owner of Halifax, lost 2.5 per cent to 656p and Royal Bank of Scotland was down 1.7 per cent at 367.75p. Northern Rock lost 6 per cent to 99p.
Marks & Spencers lost 8p to 412p as it raised fears that deteriorated even further since its Christmas warning by handing out 800,000 “20 per cent off’ vouchers for staff and their families.
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The FTSE 100 was down 50.5 points at 5,859.5 by 10.19am, losing ground after its 200-point bounceback yesterday as analysts questioned whether Warren Buffett’s offer to underwrite some assets of the bond insurers would really help the market.
Of the gainers, British Energy stood out after slightly better than expected nine-month profit and it gained 5.4 per cent to 515.5p. It also stuck to its forecasts of having four of its shut-down reactors back running over the second and third quarters of its 2008-09 financial year, cutting output by 11 terawatts. The shares had fallen in the run-up to the figures on fears that it would cut its output forecast.
Reckitt Benckiser rallied 1 per cent to £26.89 even as analysts said that its results were a little below forecasts and the company made no mention of rising raw material prices.
In the FTSE 250 the recruiter Michael Page gained another 1.5 per cent to 242.5p after Blue Oar Securities yesterday talked up the prospects of the staffing sector, saying that it provided a necessary service even in a downturn.