London's leading share index shed 1.9 per cent – closing 100.14 points lower at 5136.12 – as banks and miners dragged the market into the red.

Wrangling over the extent of the US package – aimed at taking the bad debts off banks' books – unsettled investors despite assurances of swift action from President Bush.

Uncertainty over its wider economic impact also pushed traders into oil as a safe haven, with crude for November delivery at 107 dollars a barrel.

In London, Halifax Bank of Scotland was the biggest Footsie faller – down 283/4p to 1801/4p or 14 per cent – after figures showed mortgage lending at another record low in August.

High street rival Lloyds TSB, which is planning a £12.2bn rescue deal for HBOS, also suffered, down 131/4p to 2613/4p.

Royal Bank of Scotland followed suit in the gloom over the sector with a 6 per cent fall, off 123/4p to 2031/4p.

In the FTSE 250, Bradford & Bingley was one of the leading fallers – off 12 per cent, or 31/2p to 243/4p – with no buyer yet in sight for the struggling firm.

Back in the top flight, miners also acted as a major drag after metals prices receded. Eurasian Natural Resources was the leading faller, off 781/2p to 608p.

Vedanta Resources and Anglo American followed ENR lower, down 177p to 1527p and 191p to 2136p respectively.

Meanwhile, higher oil prices affected stocks in the travel sector.

Bus and rail firm Stagecoach slipped 20p to 2831/4p and tour operator Thomas Cook fell 131/4p to 2333/4p.

British Airways dipped almost 4 per cent on the crude prices, off 8p to 2101/2p, and budget carrier easyJet was 231/2p lower at 3391/2p in the FTSE 250.

It was closely followed by sugars group Tate & Lyle, down 461/2p to stand at 3691/2p after a setback in a patent battle with Chinese manufacturers over its Splenda sweetener.

Pub groups were also suffering in the second tier after Mitchells & Butlers highlighted the mounting cost pressures facing the industry.

The All Bar One owner's shares dropped 17p to 2551/2p, with Punch Taverns also seeing a heavy fall, down 271/4p to 185p.

The group reported like-for-like sales up 0.9 per cent in the 51 weeks to September 20, but said comparable sales would need to grow by around 3 per cent to keep operating profits at a similar level in the following year.

Stocks in the traditionally defensive sectors were among the few FTSE 100 firms in favour, with Imperial Tobacco adding 28p to 1758p, and British American Tobacco 27p better at 1795p. Consumer products group Unilever was 35p stronger at 1487p, a gain of 2 per cent.

The biggest Footsie risers were Hammerson up 231/2p to 9891/2p, Unilever, International Power up 81/2p to 364p and British Land which ended the session 131/2p higher at 760p.

The biggest fallers were HBOS, ENR and Vedanta Resources.