Banks drag FTSE into the red

The FTSE dropped 0.72% to 5,535.8 in early trading as speculation over government plans to introduce a new bank windfall tax hit shares in the sector.

Business secretary Vine Cable will hit out at bankers in a speech later today, saying the capitalist system is tainted and kills competition.

Aviva led the losers list with the insurer down 3.72% or 15.5 points to 401.5p while Lloyds slipped 2.18% to 75.22p. A total of 85 of the 100 blue chip stocks dipped into negative territory.

Top of the early standings are Randgold, up 1.74% to 6420, after miners were boosted by the weak dollar. Elsewhere, African Barrick, Gold Xstrata and Fresnillo all advanced.

Imperial is another of the day's early winners after the company said it is on track to meet its yearly forecasts. The tobacco group is up 1.53% or 29 points to 1,992p.

The Dow Jones ended yesterday's trading 7 points higher at 10,761, powered by the Federal Reserve hinting extra stimulus measures will be integrated into the US economy if it continues to stagnate.

Meanwhile in Asia, the Nikkei ended the day slipping into the red for the second consecutive day as the yen climbed to a one week high against the dollar. The index fell 35 points to 9,566.