In Britain, the biggest loser was HBOS, owner of Halifax and the Bank of Scotland, which saw nearly 13 per cent wiped off the value of its shares on worries about its exposure to risky mortgages.

The FTSE 100 fell for the third straight session to close down 217.3 points at 5,414.4, a fall of nearly 4 per cent.

In the US, the sudden sale of Bear Stearns over the weekend took the market by surprise and raised fears that few banks are safe from the growing credit crisis.

British Energy, which is worth £6.5bn, is talking to several companies about a possible takeover or merger following the Government's decision to review its shareholding in the company.

The Government is keen to sell its 36 per cent stake in order to raise much-needed cash as quickly as possible.

The Government obtained its shareholding in the company after it rescued British Energy from the brink of collapse six years ago.

The company, which has eight nuclear sites producing a sixth of Britain's electricity, said it was holding discussions with a number of interested parties about its future.

Tuesday

LAST summer's floods and an increase in life expectancy knocked nearly £350m off annual profits at pensions and insurance giant Legal & General.

The company said the June and July downpours that hit Yorkshire, Midlands and North England had cost it £76m, which was an improvement on City estimates for the bill which were as high as £100m.

The fact that customers are living longer meant the group also had to take a £269m charge over the year.

The group reported a 26 per cent fall in 2007 profits, to £912m, which was below forecasts.

Under the revised assumptions, the life expectancy of a new male customer aged 65 has been increased to 25.1 years from 23.8 on a best estimate basis.

L&G warned that it expects this year to be a challenging one for the industry, although it hopes to increase market share.

It warned that the savings market looks tough as a result of market volatility and capital gains tax charges, but said its core protection business should outperform.

Thomson and First Choice parent TUI Travel said that it had more than halved first-quarter losses as it capitalised on holidaymaker demand for trips to far-flung destinations.

The group – created by the merger of First Choice and the travel arm of German firm TUI – said that underlying pre-tax losses dropped by 51 per cent, to £60m, in the three months to the end of December.

TUI said its moves to tap into the growing demand for medium and long-haul holidays and efforts to keep a tight control on capacity for loss-making shorter journeys paid off.

Wednesday

THE Bank of England dramatically stepped in to stop a run on the UK's biggest mortgage lender, Halifax Bank of Scotland, as its shares plummeted amid fears over suspicious trading.

Widely criticised for its slow reaction to the near-collapse of Northern Rock, the Bank moved quickly to deny "false" rumours it had been approached by HBOS for funding.

HBOS, whose shares plunged by as much as 17 per cent to a record low at one point, insisted it had no funding problems and described the claims as "malicious" and "lies".

The City watchdog, the Financial Services Authority, is investigating the theory that traders spread rumours about the bank in order to profit by "short-selling" its shares.

In short-selling, a trader borrows shares and sells them immediately in the hope of repurchasing at a lower price.

The trader can then return them to the lender and make a profit on the difference. The process is commonly known in the market as "slash and trash".

Fashion chain Next warned of increasing sales pressure this year as struggling shoppers tighten their belts.

The high-street giant is bracing itself for the impact of soaring fuel and household bills and more expensive mortgages on its customers.

Next said its main customers – aged between 25 and 45 – were likely to be hit heaviest by higher costs and debt burdens.

It predicted like-for-like sales declines of between 4 per cent and 7 per cent across its high street stores in the first half of this year – worsening from the 3.2 per cent decline seen in the 12 months to January.

Next said: "We can see no reason why there should be any recovery in consumer spending during the year ahead."

Thursday

MEDICAL equipment company Dawmed Systems said it hoped to return to the black this year following a disappointing 2007 when the group made a significant loss.

Rotherham-based Dawmed blamed a lack of spending by the NHS, investment in IT and litigation costs for a £578,000 loss in the year to September 30, down from an £88,000 loss the previous year.

But chairman Kevin Gilmore said that a number of new contracts and the largest order book in the group's history, should help it return to profit in 2008.

Earlier this month, the group was awarded a major contract with the East Kent Hospitals NHS Trust covering four hospitals.

The contract involves supply, installation, testing and validation of all the trust's decontamination equipment.

Dawmed makes machines that wash and disinfect medical equipment

Skipton Building Society has sold its subsidiary, Direct Life & Pensions, to specialist financial services company Cardif Pinnacle.

Skipton said the deal, for an undisclosed sum, would enable the company to concentrate on its main core areas although it will continue to use
DLPS's services.

DLPS, which was bought by the Skipton Group in August 2001 for £4.1m, acts as a broker selling term assurance – a type of life assurance – over the internet and telephone.

David Cutter, Skipton's group commercial development director, said: "While DLPS has grown under Skipton's ownership, we feel that Cardif Pinnacle are better positioned to develop the business to its full potential."

Friday

It was reported that The Bank of England was considering a range of measures to help ease the impact of the credit crunch on UK banks.

Governor Mervyn King is expected to announce plans shortly to accept a wider range of collateral for Bank of England loans, while also
pumping more money into the markets.

The moves would help to ease some of the pressure currently faced by banks as they struggle to borrow money to lend on to consumers after the wholesale money markets effectively dried up.

Mr King has previously been reluctant to help the struggl-ing banks as he is understood to think this would be a moral hazard, encouraging
banks to pursue risky business models as they would not have to suffer the consequences.