Greece debt concerns see London slump into the red

Blue chips dived after ratings agency Standard & Poor's downgraded Greece's credit rating to junk status, while Portugal's debt was also downgraded.

The FTSE 100 Index sunk 150.33 points to 5603.52 amid a global sell-off as fears over the economy worsened.

On Wall Street the Dow Jones Industrial Average fell over 1 per cent, while in Europe the Cac 40 lost nearly 2.7 per cent and Germany's Dax was 2.4 per cent lower.

Greece called for funds from a bailout package on Friday, but some European countries still have to approve the aid and fears are rising over whether the money will arrive before a May bond payment deadline.

The threat of Greek default has sent borrowing costs higher in other indebted European countries. S&P raised fears the crisis could spread to other nations by downgrading its credit rating on Portugal amid concerns about the country's ability to get a handle on its debt.

The euro took a hammering as traders sought a safe haven in the US dollar, while the pound also fell back on the fresh European concerns. Sterling was down to 1.15 against the euro and slumped over 1 per cent to 1.53 against the dollar.

In the US, home prices fell in February, but rose compared to a year ago for the first time in more than three years, in the latest sign that the housing market is slowly recovering.

In other data, US consumer confidence rose in April to the highest level since the collapse of investment bank Lehman Brothers in September 2008, driven by growing optimism about the labour market, according to a private sector report.

House prices have benefited recently from a federal homebuyer tax credit that expires on April 30.

In London, banking shares were under pressure amid the economic jitters and nervousness surrounding the Goldman Sachs hearing in the US. Even news of profits at part-nationalised Lloyds Banking Group failed to provide cheer. Despite an early boost to Lloyds' shares after it returned to the black for the first three months of the year, the lender ended the day down nearly 3 per cent. The bank expects to report profits at both the half-year and full-year stage, but the firm – which is 41 per cent owned by the taxpayer – slipped 21/8p to 681/8p.

Oil giant BP was also among the fallers despite saying first quarter profits more than doubled compared with last year, at 5.6 billion US dollars (3.6bn), helped along by rising crude oil prices.

Its results have been overshadowed by the continuing oil spill from a BP well in the Gulf of Mexico and shares were more than 2 per cent lower – down 163/4p to stand at 610p.

Only two firms made it onto the risers' board and the overall sell-off saw them lose much of their momentum towards the end of the session.

Rival Royal Dutch Shell, which reports tomorrow, topped the leaders' board, adding 9p to 1922p after an upgrade from brokers at JPMorgan Cazenove.

A stronger dollar hit metal prices and hurt heavyweight commodity shares, helping to drag the market lower.

Kazakhmys was one of the biggest Footsie casualties, losing 91p to 1389p, while Vedanta Resources shed 135p to 2660p.

The biggest Footsie risers were Royal Dutch Shell and Imperial Tobacco which gained 6p to 1953p.

The biggest Footsie fallers were Man Group down 163/8p to 2475/8p and Kazakhmys.