Cool response for trillion dollar US bailout package.

Byline: By RUSSELL LYNCH

THE FTSE 100 Index shed more than 2% yesterday as markets reacted with initial disappointment to US economic rescue plans.

Wall Street's Dow Jones Industrial Average was more than 3% down - below 8,000 - amid early scepticis mover the trillion-dollar package, which includes a government private sector partnership to help remove banks' toxic assets from their books.

The downbeat sentiment hit the Footsie late in the session after cautious trading for much of the day. The blue-chip index eventually closed 94.5 points lower at 4213.1.

CMC Markets trader Jimmy Yates said: "The short term view remains bearish on this initiative and although the state bail-outs may be a 'necessary evil' to expedite the recovery, it's difficult to believe this will be a quick turn-around."

Banks were in the spotlight after more huge losses from Swiss giant UBS on the day former bosses of Royal Bank of Scotland and HBOS apologised publicly for the events that led to taxpayer rescues.

RBS shares were 1p lower to 23.8p while Lloyds Banking Group - which nowowns HBOS - shed 5.6p to 94.9p.

Elsewhere in the sector, HSBC fell 18.25p to 537.25p. Barclays gave back earlier gains to close 2.8p lower at 113.4p.

Losses from heavyweight miners on lower metal prices weighed the blue-chip index down early on, although the sector clawed back some of its losses as the session wore on.

Kazakhmys was however the leading faller, down 10%, or 30.5p to 291p, closely followed by Xstrata, which slid 70p to 724.5p.

Inter-dealer broker Icap was another prominent faller after a downgrade from Morgan Stanley brokers sent it 21p lower to 220.75p.

Cable & Wireless meanwhile was on the back foot despite a trading statement reassuring it was on track to meet full year earnings guidance. Shares fell 12.8p to 151p, as analysts blamed profit taking for the 8% fall.

Among the gainers, British Airways made strong ground thanks to positive broker comment. The shares gained 2.8p to 142.1p.

But fellow transport firm First Group fell 5p to 290p.

The biggest Footsie risers were Centrica ahead 11p at 284.75p, British Airways, GlaxoSmithKline up 17p at 1250.5p and BAE Systems up 4.25p at 379.75p.

The biggest Footsie fallers were Kazakhmys, Xstrata, Icap and Cable & Wireless.

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