The FTSE 100 Index plunged more than 5% today as recession fears took hold despite a £50 billion banking bail-out and a shock interest rate cut.

The fall wiped £57 billion from blue-chip stocks and sent the top-flight index crashing to 4366.7 - its lowest close since August 2004.

The latest white-knuckle ride for investors comes two days after the Footsie fell 7.8% - its biggest one-day percentage fall since Black Monday in 1987.

Today shares took an early tumble despite an early boost for banks from the Treasury's rescue.

The index moved into the black after the Bank of England slashed rates by 0.5% to 4.5% in joint action with other central banks around the world.

But the Footsie failed to cling onto the gains as oil prices fell as low as 86 US dollars - the lowest for a year - and mining stocks tumbled as global recession fears mounted.

The influential International Monetary Fund added to the gloom after warning of a deep downturn for the global economy.

Across Europe, the sell-off continued as fresh uncertainty swept through markets despite Government efforts. France's CAC 40 was down more than 6%, while Germany's Dax slipped nearly as far.

Wall Street's Dow Jones Industrial Average also lost ground as investors questioned whether the fightback would be enough to revive credit markets and ward off a global recession.

In London, Barclays was down nearly 11% with Lloyds TSB 7% lower after they were named as two of eight UK lenders able to draw on up to £50 billion of capital from the Government to help shore up their balance sheets.

HBOS and Royal Bank of Scotland, which both fell around 40% yesterday amid funding fears, failed to sustain their huge early gains. HBOS - which soared almost 65% at one stage - eventually closed 24% ahead with RBS less than 1% better off.

CMC Markets dealer Jimmy Yates said markets had been "left largely unimpressed, at least in the short term".

"The mood did pick up a little as momentum gathered behind the banks ... on the back of that global emergency rate cut. However even this has been short lived," he added.

Retailers were given an initial boost after the rate cut on hopes for improved consumer confidence but later gave back their gains.

Under-pressure giant Marks & Spencer eventually finished 4% lower with fashion chain Next losing around 6%. Supermarket Sainsbury's was the Footsie's biggest casualty, down 15% despite better than expected sales figures as rumours mounted that a major shareholder had sold a 10% stake in the business.

As well as the financial market turmoil this week has seen a raft of gloomy UK economic data including historic lows for the manufacturing sector.

Miners were among the big losers today amid fears of lower demand for metals as global growth slows.