FTSE down despite central bank action

By Jon Hopkins

LONDON (Reuters) - The top share index ended 0.7 percent lower on Thursday in choppy trade as volatility reigned despite a concerted move by central banks to boost liquidity and Lloyds TSB's (LLOY.L) deal to buy HBOS HBOS.L.

Investors were also edgy ahead of Friday's futures and options expiries.

The FTSE 100 index .FTSE closed 32.4 points lower at 4,880.0 with a jump back above the 5,000 barrier to a session peak of 5,015.9 proving short-lived as the bulls and the bears battled over the psychologically important level.

The benchmark lost 2.3 percent in highly volatile trading on Wednesday, and is down nearly 8 percent on the week.

The turmoil in the markets prompted the Federal Reserve and other central banks to pump billions of dollars into the global money markets in a coordinated effort to ease a funding squeeze.

The move initially allayed some of the fears on the health of the global financial system that has seen investors dump shares.

"Although the bounce off the lows is at least a step in the right direction, the impact still has to be seen as cautious at best," said David Evans, market analyst at BetOnMarkets.com.

"Today, investors and financial institutions have shut the door on the financial apocalypse, but the storm is still there. It will be some time before investors will step outside confidently from the safety of the sidelines," Evans added.