Banks drag FTSE in early trading

Banks have taken an early hammering this morning as the FTSE 100 slides 1.64% by 9:47am.

The banks' continued share price deterioration comes amid reports of further big losses from Lloyds and RBS.

Lloyds reported HBOS, which it absorbed in January, made a pre-tax loss of £10.8bn in 2008 while RBS revealed a record UK loss of £24.1bn and a new bail-out worth up to £25.5bn.

Shares in Lloyds were down 15.33% while RBS fell 10.53% by 9:47am.

Winners this morning are a mixed batch with traditional defensives, Xstrata and Imperial Tobacco, posting early gains of 3.13% and 0.24% respectively.

In the US the Dow Jones closed down 1.22% last night as President Obama announced plans to overhaul the US health care system.

This hit pharmaceuticals hard and Merck Co. was yesterdays' biggest US loser shedding 6.70% off its share price.

The President also unveiled a $3.55trn budget for 2010 to help draw the US economy out of recession.

He outlined a further $750bn more for the financial industry, on top the $700bn already authorised by Congress.

However, confidence in the banks was knocked on the statement with sentiment further dented after close as mortgage finance giant Fannie Mae said it would need $15bn from the US Treasury after reporting a $58.7bn loss for 2008.