The mortgage banks have taken a big hit after poor results from Bradford & Bingley and renewed talk that Northern Rock could end up nationalised after all.
Opening the bank reporting season, B&B announced worse than expected write-downs of £226m on various bits of toxic debt and missed analysts' forecasts. Its shares are now down nearly 13% to 212p.
Northern Rock fell 7p to 98p as the government told the two potential bidders - Virgin and the management - to improve their offers, or the bank would be nationalised. Alliance & Leicester was caught in the fallout, down 22p to 579p.
With the latest Bank of England inflation report suggesting that any future interest rate cuts would be modest in nature, the profit takers moved in, and the FTSE 100 fell 58.9 points to 5851.1.
Over at Punch Taverns, fund management group QVT Financial has edged up its stake again, to 7.67%. QVT, it will be remembered, is not convinced by Punch's plan for a - nearly - all share merger with Mitchells & Butlers. Punch slipped 6p to 635p, while M&B is 7.75p lower at 447p.
