Fear of further writedowns at HBOS made it the worst bank performer, falling 16¼p to 470½p as analysts cut their target price to as low as 350p.

That price, set by Sandy Chen of Panmure Gordon, is below the level HBOS plunged to a month ago in intra-day trading on supposedly false rumours that it was in financial difficulty. Mr Chen predicted further writedowns throughout 2009. Fears were stoked by Standard & Poor’s cutting its rating on $41 billion in mortgage-backed bonds, known as “Alt-A” - the kind HBOS is heavily invested in.

Tom Rayner of Citigroup dropped his target from 600p to 382p after HBOS’s the dilutive rights issue. He said: “We think the company is providing a cushion to absorb potentially large impairment losses as property markets weaken.”

The drastically reduced price targets, as much as 25 per cent below current levels, will make it harder for the Financial Services Authority to prove talk that the Halifax owner was in financial trouble last month was a deliberate false rumour.

The FTSE 100 closed down 2.1 at 6,087.3 having oscillated between a 30-point gain and a 54-point fall.

Admiral, the insurer, rose 50½p to 871p after Citigroup’s Andrew Crean said a recent 20 per cent sell-off was overdone.

The mining sector was also on the slide, as metals prices were hurt by the strengthening dollar and after Kazakhmys, down 66p at £15.82, revealed copper cathode production fell 16 per cent year-on-year because of severe winter conditions.

Home Retail Group was the top blue-chip performer, up 21¼p at 264p, after good results from Argos offset poor figures from Homebase.

Bodycote International was the top mid-cap riser, up 30¼p to 241¾p, after it said it was considering selling its testing unit. The sale may clear the way for a bid for the rest of the company. Sulzer of Austria has been eyeing Bodycote.

PartyGaming fell 2¼p to 24¼p as it unveiled zero growth in the number of average daily players on its online gambling sites.

Cattles, the door-to-door lender, which just completed a rights issue, rose 22½p to 239¾p after it was included in a Dow Jones dividend tracking index.

Rank, the Grosvenor casino and Mecca bingo group, rose 1p to 89p after Gerry Sutcliffe, the gambling minister, promised imminent measures to help the beleaguered bingo industry, thought to be an increase in the number of allowed jackpot machines.

Guoco and Genting have both built stakes and are seen as potential bidders. The move should be good news too for Ladbrokes, flat at 327½p, and William Hill, down 14¼p at 386p.

Clarkson, the shipping broker, fell 55p to 840½p after the board said it had ousted chief executive Richard Fulford-Smith over a lawsuit filed by two Russian state-owned shipping companies. On Tuesday, citing new evidence, it raised its provisions for the legal battle over the company’s fees from £6 million to £14 million.

New York: US shares slipped after the Federal Reserve cut interest rates as investors, worried about weak consumer spending, locked in profits. The Dow Jones industrial average closed 11.80 points lower at 12,820.10.

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