FTSE Down 2.2 Pct As U.S. Bank Plan Disappoints

The FTSE 100 closed 94.53 points lower at 4,213.08, led by banks and commodity shares.

Britain's leading share index ended down 2.2 percent on Tuesday, snapping a five-session winning run, as a revamped U.S. bank rescue plan disappointed investors.

The FTSE 100 closed 94.53 points lower at 4,213.08, led by banks and commodity shares. The UK benchmark index is down 5 percent so far this year, after losing more than 31 percent in 2008.

Major European indexes also finished the day sharply lower.

Banks were among the top losers, with HSBC, Barclays, Standard Chartered and Lloyds Banking Group losing between 2.4 and 5.6 percent.

Royal Bank of Scotland slipped 4 percent. The bank said it could cut up to 2,300 jobs in Britain or around 2 percent of its local workforce of 106,000.

The U.S. Treasury Department unveiled a revamped financial rescue plan to cleanse up to $500 billion in bad assets from banks' books and support $1 trillion in new lending through an expanded Federal Reserve programme.

"The market is still digesting all the details. But the initial reaction is clearly one of disappointment. It's always going to be difficult for the plan to live up to the hype," said Martin Slaney, head of derivatives at GFT Global Markets.

"It needs to be a real ... shocker today to spur this market higher. We haven't really got that."

Oil producers were the top-weighted losers, as crude prices traded below $40 a barrel. BP, Royal Dutch Shell, BG Group and Tullow Oil dropped 1.7 to 4.3 percent.

Miners were also weaker as some base metal prices eased. Anglo American, Xstrata, BHP Billiton and Vedanta Resources were down 4.6 to 8.8 percent.

Kazakhmys fell 9.5 percent, ending its five-day winning run, which was boosted by currency devaluation in Kazakhstan. The stock gained 45 percent during that period.

In other bleak news for the UK economy, house prices fell at a faster pace in January than in December and the outlook for prices turned gloomier as the number of completed home sales fell, a survey showed on Tuesday.

Also on the downside, telecoms carrier Cable & Wireless sank 7.8 percent after a third quarter trading update, with Merrill Lynch saying the lack of a guidance update was a disappointment.

Drugmakers were the biggest boon to the index as investors retreated into sectors seen as relatively less risky. GlaxoSmithKline put on 1.4 percent and AstraZeneca added 1 percent.

Centrica rose 4 percent to top the FTSE 100 gainers' list as traders cited market talk that Gazprom was interested in the British utility. Gazprom said in a response that it was not considering bidding for Centrica.

British Airways rose 2 percent after Merrill Lynch added the airline to its influential Europe 1 list.

BAE Systems advanced 1.1 percent. A White House Web site said it became the Pentagon's fifth-largest defence contractor in fiscal 2008, knocking Raytheon Co out of a spot it held since at least 2000.