Banks slump on US mortgage concerns

Further concerns about the US mortgage sector sent the stock markets in the UK tumbling this morning (July 16th), with banking institutions bearing the brunt of the slide.

The FTSE reacted to worries that the financial crisis affecting the US mortgage market could continue to spill over to the UK and force lenders here to look for additional capital, pushing the blue chip index down over 91 points to 5,080 as of 14:00 BST.

Royal Bank of Scotland shares were down over seven per cent at 154.30, while Halifax Bank of Scotland slid ten per cent to 234.75.

Barclays also suffered on the concerns about US markets, with its share price dropping over seven per cent to 242.

Website citywire.com noted that the markets were also not helped "by a negative trading update from building supplies firm Wolseley".

It explained: "[The firm] scrapped its full year dividend amid worries that it may be close to breaching its banking covenants after reporting a 28 cent drop in profits".

Forbes added: "US futures indicated a weaker start on Wall Street, with spread-bettors IG Index forecasting the Dow Jones Industrial Average to open around 91 points lower.

"American investors have a slew of economic reports to digest as well as Federal Reserve Chairman Ben Bernanke''s second day of testimony before Congress."