* FTSE 100 down 5.0 percent
* Lehman Brothers failure sends financials tumbling
* Energy stocks weighed by oil below $100
(For a TAKE A LOOK on Lehman, click on [])
By Simon Falush
LONDON, Sept 15 (Reuters) - Britain's leading share index
tumbled 5 percent by midday on Monday, dragged down by bank
stocks after U.S. investment bank Lehman Brothers <LEH.N> filed
for bankruptcy protection.
By 1115 GMT, the FTSE 100 <> fell 277.4 points to
5,140.2, wiping out all of the gain made last week, and was on
track for its worst day since January 21. There was no gainer on
the index.
Worries about the financial crisis deepened after attempts
on Sunday to find a rescuer for Lehman failed and troubled
insurer American International Group <AIG.N> asked the Fed for a
lifeline, according to news reports.
HBOS <HBOS.L> topped the FTSE 100 losers' list, slumping 36
percent to 181.7 pence, an all-time low. It was more than 730
pence at the start of the year.
HBOS is more reliant for its funding than any other major UK
bank on borrowing in the wholesale market, and could face higher
borrowing costs as a result of Lehman's collapse.
Lloyds TSB <LLOY.L>, HSBC <HSBA.L>, Royal Bank of Scotland
<RBS.L>, Standard Chartered <STAN.L> and Barclays <BARC.L> lost
between 4 and 13.1 percent.
The U.S. Federal Reserve said for the first time it would
accept stocks in exchange for cash loans and 10 of the world's
top banks agreed to set up a $70 billion emergency fund, with
any one of them able to tap up to a third of that.
But Bank of America <BAC.N> agreed to buy Merrill Lynch
<MER.N> in an all-stock deal worth $50 billion, seeking a
bargain as the world's largest retail brokerage sought refuge
from fears it could be the next victim. []
"It's a very difficult day, its difficult to find grounds
for optimism, it's a very dangerous time," said Crispin Odey,
founder and fund manager at Odey Asset Management.
"We've had four acts in the U.S. to support confidence: We
had a cut of 75 basis points, we had the unlimited funding, we
had the Bear Stearns save (by the Federal Reserve) and the
Fannie Mae and Freddie Mac save and the market is still going
down so it's painful."
Fed fund futures showed an 92 percent chance of a further 25
basis-point cut by the Fed, which is due to announce a rate
decision on Tuesday.
Also in the financial sector, Friends Provident <FP.L>,
Prudential <PRU.L>, hedge fund Man Group <EMG.L> and the London
Stock Exchange <LSE.L> shed between 7.1 and 10 percent.
SLIPPERY OILS
Energy producers fell as oil tumbled to a seven-month low
<CLc1> on early signs that Hurricane Ike may have spared key
Gulf Coast infrastructure, taking 46 points off the FTSE 100.
BP <BP.L> and Royal Dutch Shell <RDSa.L> both fell around
3.5 percent while BG Group <BG.L> lost 7.3 percent.
Heavyweight miners were among the standout losers, with BHP
Billiton <BLT.L> sinking 5.4 percent, Rio Tinto <RIO.L> sagging
5.8 percent and Anglo American <AAL.L> dropping 6.4 percent.
The Financial Times quoted Sainsbury <SBRY.L> Chief
Executive Justin King as saying consumer sentiment was worse
than it had ever been going into Christmas. []
Sainsbury fell 4.3 percent, while Tesco <TSCO.L> shed 2.1
percent and Morrison Supermarkets <MRW.L> lost 2.4 percent.
Other retails and consumer-related stocks also took a
battering, with Enterprise Inns <ETI.L> down 10.7 percent,
British Airways <BAY.L> off 4.8 percent and Marks & Spencer
<MKS.L> shedding 3.5 percent.
(Editing by Quentin Bryar)
