UK banking shares continue to take a battering

| January 21, 2009 | 0 Comments

The FTSE 100 Index is in danger of falling below the 4,000 mark as banking shares continue to fall as a wave of bad news continues to hit the UK economy.

Shares in Barclays took another pounding today. At one point, the stock was down 33% to 48p - the lowest level since 1985. However, the stock recovered and closed only 9% down at 66.1p.

Meanwhile, Lloyds Banking Group, which lost over 30% of its value yesterday, fell 20% before staging a recovery.

However, shares in Royal Bank of Scotland (RBS) rose 21% today, following a huge fall of 67% on Monday as investors reacted to the news that the bank is set to report massive losses for the 2008 year, and talk that the Government will have to fully nationalise the struggling bank.

Investors continue to be nervous about the outlook for the beleaguered sector amid fears that the Government‘s second bailout package, announced earlier this week, will mean more UK financial institutions will need to be nationalised to prevent collapse.

John McFall, chairman of the Commons Treasury Select Committee, is urging for RBS and Lloyds to be fully nationalised to prevent their total collapse.

Mr McFall believes the Government should take action ‘for the sake of financial stability’.

In related news, figures released by the Office for National Statistics (ONS) today show that unemployment in the UK reached 1.92 million in the three months to November.

Meanwhile, the pound continued to fall against the euro and the dollar.

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