Commodities ravaged | Bruiser of Wall St looked after people | Memorabilia worth more than bank | Middleman left holding parcel | Leader: after Lehman

The FTSE 100 index of leading shares today dropped below 5,000 for the first time in three years in a second day of panic selling.

As the fallout from the collapse of Lehman Brothers and the troubles faced by US insurance giant, AIG, continued to bring misery to the financial markets the worst hit was HBOS, owner of the Halifax and Britain's biggest mortgage lender, which has lost over half its value in two days trading.

London stocks fell by 226.2 points to 4,978 ahead of America's Dow Jones opening for business, rallying just slightly to close down 178.6 at 5025.6.

The FTSE was also reacting to Goldman Sachs revealing a 70 per cent fall in third quarter profit, which is the US bank's worst result since it went public in 1999.

In an attempt to shore-up the UK financial system the Bank of England released a further £20 billion worth of funding in addition to the £5bn injected on Monday.

Shares in HBOS fell a further 40 per cent today to a record low of 138.9p, after plunging by 18 per cent yesterday when Lehman Brothers declared itself bankrupt and it emerged that AIG, the US insurance giant, was seeking a $40 billion bailout.

HBOS closed down 20.98 per cent at 183.71p after the bank moved to reassure the City claiming it has a "strong capital base" with sufficient funding.

"HBOS notes the current volatility in bank share prices following developments in the United States," the bank said in a brief statement. "HBOS has a strong capital base and continues to fund very satisfactorily."

HBOS is due to refinance £120 billion worth of funds within the next three months and there are fears that banks, spooked by the market turmoil, will stop lending money to each other on the wholesale market.

Northern Rock's inability to refinance its commitments last year sparked the crisis which ended with its nationalisation.

The bank said today: "HBOS notes the current volatility in bank share prices following developments in the United States. HBOS has a strong capital base and continues to fund very satisfactorily."

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