Standard Life plunged to a new low well below its float price on mounting worries over its exposure to property values and bonds that might be propped up by specialist insurers.

The insurer, along with the rest of the sector, was hit by worries in the US that bond insurers, who are supposed to guarantee packages of bonds, did not have the capital to do so.

There are also fears over its £3 billion invested in a pooled pension property fund after a profit warning from New Star Asset Management and the freezing of Aegon UK’s property fund, Scottish Equitable, to investor withdrawals yesterday.

Standard said that it had sufficient liquidity in the fund to meet demand and that there were no queues of people demanding their cash. But the shares lost more than 6 per cent, or 14¼p, to 211¾p. Prudential was close behind, down 37p at 596½p,Aviva lost 25½p to 579p and Friends Provident was down 2.6p at 152.5p. This week Bear Stearns advised clients to sell out of insurers such as Prudential, giving warning of “asset contagion” spreading to bonds and property from the sub-prime market.

The financials sell-off was countered by bid talk among the miners and a retail rebound that left the FTSE 100 down 0.7 at 5901.7.

Xstrata was the top performer, up 266p at £33.63 on speculation that Vale, of Brazil, had cancelled a road show next week to finalise a bid. There were also rumours coming from Australia that BHP Billiton, up 29p at £13.78, was looking to raise its three-for-one share offer to about 3.5 shares and cash. It is understood that there is no such bid planned at present.

Short closing ahead of the weekend helped the London Stock Exchange to rebound 63p to £16.50 from recent falls. Gordon Brown declared in Beijing that he would encourage the Chinese to lift restrictions on companies wanting to float in London.

AstraZeneca rose 47p to £23.45 after Morgan Stanley, which said the Crestor, its cholesterol drug, could benefit from controversy surrounding the rival drug Vytorin, produced by Merck and Schering-Plough. Some clinicians have recently criticised Vytorin’s efficacy.

New Star fell 45¾p to 101¼p, and Schroders, the fund manager, was also hurt, losing 60p to £10.19.

Fears over its mortgage asset exposure led Barclays to drop 16p to 450p, and Royal Bank of Scotland fell 12¾p to 373¼p amid growing talk of a rights issue. JPMorgan did not help by reiterating its “underweight” rating for the sector, saying that prices had not fallen far enough.

Among the mid-caps, Catlin, the Lloyd’s insurer, was worst hit, down 28¾p to 320p. One analyst said it was the most exposed to asset and mortgage backed securities, accounting for 20 per cent to 25 per cent of its total investments.Benfield, the insurance broker, lost 14p to 260p, and Beazley was down 6¾p at 157p.

Aveva, the maker of computer-aided design software for utilities and shipping companies, rose 90p to 906p after it said that profits for the year would be ahead of forecasts.

New York: Shares on Wall Street resumed their downward trek as investors drew little comfort from President Bush’s stimulus plan. At the close the Dow Jones industrial average was down 59.90 points at 12,099.30.

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