UK banks hit by continental fallout

British banks felt the heat from Spain and Greece yesterday amid fears that customers were pulling their savings out of the weakest institutions.

Angus Campbell, head of market analysis at Capital Spreads, said: “Rumours that depositors are withdrawing their cash from Spanish and Greek banks faster than you can say ‘Grexit’ have been compounding concerns and have hit banking stocks here in the UK.”

Among the biggest losers in London, Barclays was down 4 per cent or 7.2p at 181.9p as Spain was forced to deny there had been a run on part-nationalised Bankia. Taxpayer-backed Royal Bank of Scotland was 0.8p lower at 21.1p, and Lloyds Banking Group dropped 1p at 27.7p.

The FTSE 100 Index fell for the fourth day in a row and is now at its lowest level since November after falling 66.9 points to 5,338.4.

With faith in the banks failing, gold bounced off its recent lows and pulled precious metal miners higher. Randgold Resources topped the risers board, up 215p at 4,855p. Defensive stocks such as National Grid and Centrica also found favour, up 1.4 per cent and 1.1 per cent respectively at 675p and 311.9p.

In the FTSE 250, broadband firm TalkTalk Telecom jumped 20 per cent or 26.3p to 159p after it reported better-than-expected results and pledged to increase its dividend by 15 per cent over the next two financial years.

But French Connection slumped 24 per cent – off 9.5p to 30p – as the fashion chain delivered another profits warning and said UK retail sales were down by 12 per cent in the last 15 weeks.

Shares in Fife-based eye scanner maker Optos dropped 18 per cent, or 47p, to 210p after first-half profits missed analysts’ forecasts.

New York: Wall Street hit a four-month low last night, as rising Spanish bond yields increased investor anxiety over that country’s banks and another round of weak data undermined hopes for US economic recovery.

The Dow Jones industrial average fell 157.65 points, or 1.25 per cent, to end at 12,440.90 while the broader Standard & Poor’s 500 Index closed down 19.92 points, or 1.50 per cent, at 1,304.88. The Nasdaq Composite Index fell 60.35 points, or 2.10 per cent, to clse at 2,813.69.