Banks - notably HBOS - have been under the cosh as the growing strains on the financial system continued to send investors running for the hills.
An exception was Lloyds TSB, which jumped 6p to 279.75p, making it one of the biggest risers in the FTSE 100. Traders said the bank had been supported by talk of Chinese stakebuilding, and 130m shares were traded today and 100m yesterday compared to a recent average of around 40m.
"Lloyds started off bearishly, along with HBOS, but it picked up later on in the day, so there could be something in it," said one trader.
But the bankruptcy of Lehman Brothers, the surprise sale of Merrill Lynch and worries about the financial state of insurance group AIG and savings and loan business Washington Mutual continued to dominate market sentiment, and helped send other financial shares tumbling.
HBOS lost another 50.5p to 182p - a 22% decline - despite the bank issuing a statement to try and calm nerves, saying it had a strong capital base and continued to fund satisfactorily. Analysts were divided on the bank. Collins Stewart issued a buy note, but Citigroup cut its price target from 250p to 200p.
News that Libor - the rate at which banks lend to each other - had jumped sharply, particularly for overnight rates, sent a worrying signal. Investors feared that, despite central banks pumping billions of dollars into the system, liquidity was drying up and banks could struggle to meet their funding requirements.
Ahead of the US interest rate decision, the FTSE 100 slumped 178.6 points to 5025.6, wiping another £42bn off leading shares. This marks a two-day fall of nearly 400 points - or around 7.5%. Traders said this was the worst situation they had seen for 30 years, although in reality the two-day drop in no way matches the 23% two-day fall during the crash of October 1987.
Among the other banks, Royal Bank of Scotland lost 21.4p to 189.1p and Barclays - which is in for some of the Lehman assets - fell 8p to 308p. Bradford & Bingley, downgraded by Moody's rating agency, ended 1.5p lower at 30p.
Some of those linked - however tenuously with Lehmans - lost ground. Icap, the interdealer broker where Lehman is a major client, lost 27.25p to 407.75p. Software and services group Misys fell 16.5p to 137.5p on worries that its proposed takeover of US group Allscripts - funded by a facility from Lehmans - could be under pressure. No comment from Misys was forthcoming.
And data supplier Fidessa fell 145.5p to 775p on concerns about its exposure to the investment banking community in the current turmoil.
Marks & Spencer fell 7.75p to 235.5p and could be under pressure again tomorrow. After the market closed, new Nielsen research showed its food sales were still lagging way behind its competitors. In the past three months, they grew by just 0.5% when the grocery market increased by 5.8%.
But there were some bright spots amid the gloom. Banknote printer De La Rue jumped 62.5p to 900.5p after an upbeat first-half trading statement, while chipmaker Arm Holdings added 7.5p to 115.5p after an unusual leak.
Usually information about future developments from Apple comes from blogs and teccie websites, not from the US company's own staff. Most of the time Steve Jobs' foot soldiers will greet outsiders with nothing more than "Hi, I'm (insert only first name) from Culpertino (Apple HQ)". But one of the tech giant's own senior managers has shone a light on its inner workings and illuminated the role played within the business by ARM Holdings.
The Cambridge-based chip designer already has its designs inside the iPhone but the actual chips are made by Samsung. Ever since Apple bought chipmaker PA Semiconductor in the spring there has been speculation about whether a potential move by the company to make its own chips would be good or bad for ARM.
Earlier this week Wei-han Lien, who joined Apple from PA Semi, seemed to answer that question by putting his job specification up on the popular LinkedIn social networking site as "manage ARM CPU architecture team for iPhone".
In other words, Apple's move into making its own chips looks set to strengthen its relationship with ARM, not weaken it.
Elsewhere a fall in the crude price left oil companies lower. BP fell 15.5p to 476p, while Tullow Oil dropped 14.5p to 703p as it abandoned a well in India after it failed to encounter hydrocarbons.
David Montgomery's heavily indebted publishing group, Mecom, seems to have been hit by a possible rogue trade. It closed down 55% at 10.5p. But earlier it was hovering at around 22.5p before a late trade of 360,000 shares at 10.5p distorted the closing price.
