London shares suffered another bruising session today, with turmoil in the financial sector driving the FTSE 100 close to setting a new six-year low.
The insurance company Aviva lost a third of its value amid fears about its capital position and the health of the sector generally.
The owner of Norwich Union said it would maintain its dividend, but the shares closed down 95.1p to 189.9p.
Industry peers were dragged down, Legal and General losing almost 29% or 10.8p to 26.6p and Prudential down 20%, slipping 55.25p to 221p.
Standard Life dropped 24.1p to 138.5p, Friends Provident slid 9.5p to 60.7p, and Old Mutual followed the negative trend, off 4.9p at 32.5p.
The banks were also under the cosh, led by a 24% fall in Barclays shares.
Barclays lost 20.8p to 65.5p after Panmure analyst Sandy Chen cut his target price from 55p to 40p, flagging up concerns that the bank could face impairment charges of around £13bn this year and next year, more than management guidance of £7bn-8bn.
"We expect this will push Barclays into major losses in both 2009 and 2010; if Barclays decide not to participate in the government APS [asset protection scheme], we see additional capital/dilution risk as well," he said in a note, which maintained his sell recommendation on the stock.
Barclays was also reported to be facing questions from US liquidators about $3.3bn it received when it acquired part of the collapsed bank Lehman Brothers.
Lloyds Banking Group was also a heavy faller, down 7.4p to 40.3p, as investors worried that the government would add to its 43% stake as a result of the bank's participation in the asset protection scheme.
Royal Bank of Scotland slid 1.9p to 20.8p, HSBC slipped 23.5p to 377.5p, while the Asia-focused Standard Chartered nosed down 8.5p to 716p.
Overall the FTSE 100 lost 116.01 points to close at 3529.86, almost cancelling out yesterday's recovery and taking the blue-chip index to within 18 points of Tuesday night's close, its lowest level since 2003.
The FTSE showed little reaction to the Bank of England's decision to lower interest rates to a new low of 0.5% and to begin the process of quantitative easing, but deteriorated after a poor start to trading on Wall Street.
It has been a volatile week, with three-figure movements every day adding up to a decline of more than 300 points since Friday night's close.
The property sector provided respite from the gloom amid enthusiasm for the series of rights issues companies have announced in recent weeks.
British Land, which is raising cash at 225p, gained 15.75p to 346.25p, while Hammerson rose 10p to 235.25p, well north of the 150p price at which investors are being asked to subscribe in the cash call.
Their FTSE 250 peer Segro rose 4.5p to 101.5p.
Also among the mid-caps, the temporary power provider Aggreko leapt 35.25p to 412.5p, on the back of soaring pre-tax profits.
