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The FTSE 100 gave up early gains this afternoon and the Dow Jones pushed aside yesterday's optimism and dropped.

The London index closed down 0.19 per cent to 4,052.23 – with the only element of joy coming that it held up over the 4,000 mark.

At 12:29 EST (17:29 GMT) the Dow Jones was down 2.81 per cent to 7,996.72.

New York saw no winners and double digit drops for Citigroup, Bank of America and Microsoft.

In London Lloyds Banking led the gains – up 8.87 per cent to 49.10p.

Amlin and Standard Chartered both rose 4.44 per cent and Friends Provident was up 4.21 per cent.

BT Group fell 10.89 per cent, Barclays was down 10.44 per cent and Man Group fell 7.13 per cent.

David Jones, chief market strategist at IG Index, said: "After a bright start this morning, with the FTSE opening almost 100 points ahead of yesterday’s closing level, there has been a gradual downward trend as the day’s trading has progressed.

"With intense recent speculation surrounding the banking sector, Lloyds and Barclays are finishing the day at opposite ends of the FTSE’s list of climbers and fallers.

"The sector’s varied performances seem to suggest the bail-out has not yet had its intended stabilising effect."

He added: "In fact, the most noticeable consequence so far appears to have been a continued slump in the value of sterling, which was trading perilously close to a 23-year low against the dollar and the yen today."