Bank stocks dive to send FTSE 3% lower

(Updated 2:30pm) Banks are continuing to take the brunt of the latest market sell-off as fresh fears of a European banking crisis emerged on Monday.

London's leading index is 175 points lower, or 3.4%, at 5,116, with some of the UK's largest banks seeing big falls.

Investor sentiment has been hit after Britain's services sector suffered its biggest slowdown in a decade.

Meanwhile, fresh fears over Italian and Spanish debts have also reasserted themselves.

In London, part-nationalised RBS is almost 12% lower at 21.9p, while Lloyds Banking Group and Barclays have fallen by 7%.

There are also ongoing concerns over what the impact will be on UK banks if they are forced ringfence their investment arms.