Citi's plans to cut 52,000 jobs added to the sombre mood among traders after dire surveys from UK business groups and confirmation from Japan that the world's second largest economy is now in recession.

With Wall Street's Dow Jones Industrial Average also down in early trading, the FTSE 100 Index eventually closed 100.81 points lower at 4132.16.

The poor beginning to the week weighed heavily on banking stocks, with HBOS the leading blue-chip faller after a financier conceded defeat in his battle to broker an alternative deal to its proposed takeover by Lloyds TSB.

Jim Spowart, who founded Intelligent Finance and Standard Life Bank, blamed UK Government Ministers and a series of leaks for ending his campaign to stop the Lloyds TSB deal from going through.

HBOS shares sank 16 per cent or 12p to 741/2p, while Lloyds TSB shed 17p to 149p and Royal Bank of Scotland eased 61/4p to 443/4p. This leaves taxpayers nursing about £8bn in paper losses as the trio are offering new shares under the Government's £37bn recapitalisation plans, with the Treasury set to buy any shares that are not taken up by investors.

Barclays, which is battling to convince shareholders of its plans to secure additional capital from Middle Eastern investors, was down 5p at 1541/8p, or three per cent.

Among the miners suffering from economic worries, Kazakhmys dropped 32p to 2373/4p and Eurasian Natural Resources fell six per cent or 143/4p to 248p. Xstrata also fell 71p to 8761/2p as brokers at Cazenove lowered their outlook for the sector.

The leading blue-chip riser was inter-dealer broker ICAP, ahead of an expected seven per cent rise in pre-tax profits today. Shares rose 131/2p to 2511/2p, or five per cent.

But some of the biggest gains of the session were seen outside the top flight, following speculation at the weekend about the future of two debt-laden companies.

Premier Foods rose more than 11 per cent or 31/2p to 301/2p after weekend reports linking United Biscuits with a secret bid to buy Mr Kipling from its rival.

Premier, which is looking to reduce its £1.8bn debt, is understood to have rejected the £250m approach.

Meanwhile, Taylor Wimpey shares advanced by six per cent after it was reported to be in the sights of a number of private equity firms. The housebuilder is saddled with debts of about £1.9bn and must renegotiate terms with lenders before early next year to avoid breaking banking covenants.

Shares were up 5/8p to 97/8p, while elsewhere in the sector Persimmon rose 7p to 247p, Bellway cheered 93/4p to 507p and Berkeley added 10p to 715p.

The biggest Footsie risers were ICAP up 131/2p at 2511/2p, Petrofac ahead 71/4p at 3663/4p, Legal & General up 13/8p at 715/8p and Aviva lifted 5p to 3493/4p.

The biggest fallers of the day were HBOS, off 12p at 741/2p, Royal Bank of Scotland slipped 61/4p to 443/4p, Kazakhmys down 32p at 2373/4p and Wolseley which finished the day 331/4p lower at 2711/4p.