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The heads of the major UK banks are expected to meet with the Bank of England governor Mervyn King later today.

It is reported that they will tell Mr King that more is required to reassure creditors that the Bank of England will intervene if help is required.

The meeting comes amidst global financial concerns sparked by the announcement that US bank Bear Stearns is to be bought by JP Morgan Chase.

Even with the US Federal Reserve cutting interest rates by 0.75 per cent on Tuesday, the FTSE 100 ended trading yesterday 60.20 points down at 5,545.60.

The Dow Jones industrial average was also down 293 points to 12,099.66.

On Wednesday it was announced that the UK's financial watchdog, the Financial Services Authority (FSA) would be launching an inquiry into whether traders had spread false rumours in order to undermine certain banks' shares.

HBOS, whose shares plummeted as much as 17 per cent during trading yesterday, were forced to release a rare statement categorically denying the bank was suffering any funding problems.

"There has been a series of rumours in the market today [Wednesday]," a HBOS spokesman said.

"A number of ill-founded and malicious rumours about the UK banking system in the markets.

"These rumours have not a shred of substance whatsoever. They are lies."

The Bank of England also moved to reassure investors that the rumours were untrue.

The British Bankers Association reportedly announced that senior members would be meeting with the Bank of England on Thursday to discuss Britain's financial system, the current economic climate and investigate whether investors had been spreading the rumours to make a profit.