FTSE tumbles 1.9 percent

Britain's top share index tumbled nearly 2 percent on Thursday after BNP Paribas froze redemption's from three funds over subprime trouble, spooking investors and raising concerns over a possible credit squeeze.
Financials led the FTSE 100 lower, as the BNP news triggered a major disturbance in the European money market and forced the European Central Bank to add almost 100 billion euros of emergency funds to strapped banks. The Federal Reserve also added $24 billion in temporary reserves to the US banking system.
With WestLB the latest German lender to disclose it had risky investments in subprime assets and Germany's central bank calling a meeting to discuss details of a rescue package put together for troubled lender IKB, investors were concerned about further banking losses from the recent turbulence.
The FTSE 100 closed down 122.7 points, or 1.92 percent at 6,271.2, but well off its day's low of 6,228.0. The UK benchmark index is still up 0.8 percent both for the week and for the year.
European shares also finished lower for the day. "There is probably another 5 to 10 percent downside from where we are right now," said Graham Secker, UK equity strategist at Morgan Stanley. "The market will be volatile. There will be up days, there will be down days. But we will not be out of the woods with news flows. It will get worse before it gets better ... (we're) just encouraging investors to stay clear."
The iTraxx Crossover, the widely- watched indicator of European credit sentiment, also widened, while gold fell and the yen surged as investors cut carry trades. Banks shaved nearly 33 points off the index, with Barclays down 4.4 percent, Royal Bank of Scotland losing 2.4 percent and HBOS shedding 4.9 percent.
But Alliance & Leicester advanced 1.2 percent, adding to 6 percent gains in the previous session, on persistent market talk of possible bid interest on the bank. Elsewhere in the financial sector, Man Group, the world's largest-listed hedge fund, dropped 6.7 percent and private equity group 3i Group slipped 5.8 percent.
Standard Life and Prudential fell 6.5 and 3.1 percent, respectively. "Have we seen anything more than the tip of the iceberg? This is unlikely," David Buik of Cantor Index said in an e-mail.
"It should be remembered that hedge funds are not regulated and many of them have yet to post their mark to market valuations for July...If market forces take their natural course then it is conceivable that some significant margin calls will be made on those hedge funds with short-falls."
Commodity shares also took a beating with Brent crude prices falling below $71 a barrel. Metal prices also fell over concerns over a slowing US economy. Oil major BP lost 2.8 percent and rival Royal Dutch Shell slipped 2.6 percent.
In the mining sector, BHP Billiton, Rio Tinto, Anglo American, Kazakhmys also fell. AstraZeneca slipped 3.5 percent. The US Food and Drug Administration said they were reviewing new safety data on the firm's heartburn drugs Nexium and Prilosec, but a preliminary analysis did not suggest they increased the risk of heart problems. Europe's biggest defence firm BAE Systems rose 1 percent after it beat estimates with a 17 percent rise in first-half underlying profits.