Markets fall after bank downgrade

The financial storm on the continent gathered pace today after a key agency slashed the credit ratings of several Spanish banks - including the UK arm of Banco Santander.

European markets suffered further losses after Moody’s Investor Service downgraded 16 Spanish lenders, blaming the move on the country’s waning ability to shore up its banks.

However, a spokesman for Santander UK reassured customers that it was “completely autonomous” from its parent firm, adding that “money raised in the UK stays in the UK”.

As Spain’s woes deepened, investors continued to be troubled by political turmoil in Greece, where a caretaker government has stepped in to steer the debt-ridden country into repeat elections next month.

Jordan Lambert, trader at Spreadex, said the “environment is getting increasingly bleak” with Moody’s downgrade of the Spanish banks adding to the “sour taste”.

At 9.30am the FTSE 100 Index had lost nearly 1 per cent, while France’s Cac-40 fell 1 per cent and the Dax in Germany lost 0.5 per cent. Spain’s Ibex-35, however, stood 0.5 per cent higher.