To no one's surprise the banks are leading the way down in this morning's rout. But another notable faller is building materials group Wolseley.
The company earns half its revenues in the US, and an American slowdown hits hard. Today it reported a 23% fall in half year profits and warned of even tougher times ahead. It shares have tumbled 6.53% to 497.75p.
But this drop pales in comparison to what is happening in the banking sector. The bargain sale of beleagured Bear Stearns and the US Federal Reserve's emergency action over the weekend sent Asian shares tumbling, with the FTSE 100 following suit. The UK's leading index is now down 127.1 points at 5504.6, having fallen as low as 5473.4 at one point. Dealers are not sure to take news that the Bank of England is offering £5bn in a "fine-tuning operation" - is this common sense or panic?
Tomorrow sees the Federal Reserve's interest rate decision, and some are now expecting a 100 basis point cut. Mike Lenhoff, chief strategist at Brewin Dolphin said: "The Fed has to keep cutting interest rates even if the widening spreads in the credit markets are currently frustrating its efforts to loosen monetary conditions. The short end of the Treasury market is telling the Fed it has at least another 150 basis points to go. And then there is another 150 basis points after that.
"I think we'll see a three quarter point cut in the federal funds rate tomorrow and maybe even a full one per cent cut."
Investors are running scared that there is another Bear Stearns or Northern Rock out there. In the US Citigroup and Lehman Brothers have been under pressure, and here Alliance & Leicesterand HBOS are down 10%, Royal Bank of Scotland is 8% lower and Barclays and Bradford & Bingley 7%.
There is a bit of blue on traders' screens. British Energy added 58.5p to 630p as it revealed it was in talks about a possible takeover. RWE, EDF and Centrica are among the names mentioned.
Exploration group Cairn Energy climbed 41p to £29.86 as Malaysian oil and gas business Petronas raised its stake in Cairn India to 12.7%.
Whitbread rose 13p to £12.02 on reports over the weekend it planned to merge its Premier Inn budget hotel group with rival Travelodge, owned by Dubai International Capital.
Among the mid-caps, publisher Informa fell 8% to 289.5p after chief executive David Gilbertson resigned to take over the remainder of Emap. Emap and its business-to-business division is being sold to Guardian Media Group - publisher of the Guardian and Observer - and Apax.
