FTSE in red after banking woes

FTSE falls amid US financial fears

Hefty falls in the banking and insurance sectors wiped another 1% off the London market to close a volatile week for UK blue chips.

The top share index narrowly avoided closing below the 5400 barrier as a rebound from the mining sector and strong gains from retailers helped limit losses.

London's FTSE 100 Index shed 63.8 points to 5412.8, with the focus falling on beleaguered banks amid more fears for the sector and as the Bradford & Bingley fundraising saga took a new twist.

An otherwise quiet day for corporate news provided little distraction away from financial stocks, while Wall Street is also out of action for the July 4 holiday celebrations.

In London, Bradford & Bingley was the worst hit bank, down more than 18% after being forced into another overhaul of its cash-raising plans. B&B's private equity investor Texas Pacific pulled out of its undraising plans overnight after the bank was downgraded by ratings agency Moody's.

The bank's major shareholders have stepped in to support an enlarged rights issue, but shares still fell 11p to 50p in the FTSE 250.

The rest of the sector was on the back foot after Goldman Sachs said European banks could have to raise billions more in funding.

A Citi downgrade for retail giant Marks & Spencer compounded its share misery, seeing its week of woe continue. The firm was down nearly 4%, or 9p to 227p, with poor sales figures from rival John Lewis adding to the gloom.

Supermarkets fared better after recent selling. Morrisons cheered 7p to 254.5p on a broker upgrade, while larger rival Tesco added 17.7p to 359.2p. Sainsbury's had been boosted on news of Qatari stakebuilding, but failed to hold on to earlier gains, later closing down 0.25p at 279.75p.

A turnaround in fortune for miners helped offset some of the falls for financial stocks, with the sector shrugging off earlier profit taking on weaker metal prices and a cautious note from Citigroup. Rio Tinto rose 140p to 5600p and Xstrata lifted 54p to 3764p.