Update: Banks and miners drag FTSE into the red

The FTSE has continued its downward slide in afternoon trading with banking stocks weighing particularly heavily on the index.

Shortly after 2pm, London's leading share index was down 3%, or 162 points, to 5169.

Barclays has plunged 8%, whilst part-nationalised Lloyds Banking Group and Royal Bank of Scotland are both down over 7%.

Randgold Resources is the only stock to make a gain.

European markets have fallen further into the red in mid-morning trading on the back of recessionary fears, with the FTSE 100 suffering triple-digit losses.

Shortly after 11am London's FTSE was down 1.9%, or 102 points, to 5,228. Germany's Dax has also slipped further into negative territory and was down 3.1% whilst France's Cac 40 dropped 2.3%.

Earlier, the FTSE 100 opened in negative territory as recessionary fears lingered and investors fretted over the possible introduction of a European wide "Tobin tax".

London's leading index was down 1.23%, or 65 points, to 5,266, with banking stocks and financials dragging this morning.

The index continued a poor run which saw it close 0.5% in the red yesterday.

Part-nationalised Royal Bank of Scotland and Barclays were both down more than 2% in early trading as investor concern mounts over plans drawn up by France and Germany to impose a tax on financial transactions.

Miners were also among the morning's losers, with Antofagasta and Kazakhmys both around 2.5% off the mark.

Resolution was one of just three stocks making gains, up 0.4%.

London shares took their lead from Asia, where Japan's Nikkei index closed down 1.3%. South Korea's Kospi Index and Taiwan's Taiex also fell into the red.

The FTSE's losses were mirrored throughout Europe, reflecting ongoing euro debt concerns, with Germany's Dax down 1.3% and France's Cac 40 1.2% in the red.

Meanwhile, all eyes will be on US jobless data out this afternoon, with US stocks set for a lower open.