Goldman hit by fraud charge

The Footsie tumbled by 1.7 per cent at one stage after America's Securities and Exchange Commission accused the Wall Street giant of defrauding investors in its disclosures about securities sold that were tied to sub-prime mortgage securities.

The civil fraud charge caught markets by surprise on both sides of the Atlantic.

Joshua Raymond, market strategist at City Index, said: "This news now creates uncertainty in the market in terms of whether there are likely to be any other major banks involved or under investigation."