FTSE in biggest one-day points fall

LONDON (Reuters) - The leading share index recorded its biggest ever one-day points fall on Monday with banking and commodity stocks taking a battering as the fallout from financial crisis once again overwhelmed global markets.

The FTSE 100 ended 391.1 points lower at 4,589.2, down 7.8 percent, the third biggest percentage decline, taking the index back to levels not seen for over four years.

No blue chip stock ended in positive territory.

"Another Monday, another banking crisis. Just when the market thinks it has found a base level, there's another jolt to the system." said Manoj Ladwa, senior trader at ETX Capital.

" Black Mondays used to be a once-a-decade event, now they're coming along more regularly than a London bus," Ladwa added.

Banks were among the biggest blue chip fallers with Barclays, Royal Bank of Scotland and HBOS down between 14.7 and 20.5 percent.

Chancellor Alastair Darling told parliament in the afternoon that a Banking Bill will be introduced Tuesday to build on special powers the UK government took in February.

The bill will also give the Bank of England a statutory role to maintain financial stability, the UK finance minister added.

The European Union pledged to protect people's savings and maintain financial stability as more governments followed Germany's lead in offering blanket deposit guarantees to savers as German authorities clinched a deal to rescue lender Hypo Real Estate at the second time of asking.

Investors were also concerned whether a $700 billion bailout package agreed last week from the United States would be big enough to prevent a global recession.

U.S.stocks dropped back heavily, with the Dow losing almost 5 percent, falling below the 10,000 level for the first time since Oct 2004.

Other financial stocks were also hit by the equity markets plunge, with interdealer broker ICAP down 5.2 percent, hedge fund Man Group shedding 18.1 percent and insurers Old Mutual and Prudential falling 4.4 and 13.8 percent respectively.

COMMODITIES KNOCKED

Heavyweight mining stocks suffered as metals prices fell on fears that the financial crisis would lead to a wider economic slowdown and shrink demand.

Gold was an exception, however, up nearly 5 percent on a flight to safety as stock markets tumbled.

Kazakhmys and Eurasian Natural Resources were the blue chip index's biggest fallers, down 26.5 and 23.4 percent respectively, while Xstrata, Antofagasta, Rio Tinto and Anglo American lost between 15 and 19.2 percent.

Oil majors were hit by falls of more than $3 in crude prices to below $91 a barrel, with BG Group off 10.9 percent, BP down 8.1 percent, Royal Dutch Shell losing 7.7 percent, and explorer Cairn Energy falling 17 percent.

British Airways, which often benefits from lower fuel prices, fell 12.3 percent as the market continues to be pessimistic on the outlook for airlines following the flag carrier's report of a 9 percent fall in September premium traffic as the global financial crisis deepens.

"It could be argued that even with the wild gyrations of the past few months, many still have been in denial about the state of the financial markets," said David Evans, market analyst at BetOnMarkets.com.

"Today, fear is rife as traders, investors and the man on the street are in denial no longer, this period could go down as the great financial crisis of 2008," added Evans.

(Reporting by Jon Hopkins; Editing by Hans Peters)