Bank's rate cut fails to stop FTSE from sliding

By Rebekah Curtis

LONDON (Reuters) - The FTSE 100 slid 5.7 percent on Thursday, with banks and commodities skidding after a surprise 150 basis-point rate cut by the Bank of England's which failed to calm investors' jangled nerves.

The FTSE ended down 258.32 points at 4,272.41 points.

The index briefly rallied after the rate cut, but headed south again as investors, bracing themselves for a recession, focussed on how deeply a snowballing financial crisis would damage the economy.

Blue-chip shares have shed about 34 percent in value so far this year in a credit crisis that has put the brakes on world growth and wreaked havoc and brought hefty losses in the global banking system.

The Bank of England slashed borrowing costs to 3 percent, their lowest level in more than half a century, and the central bank's biggest cut since it was made independent in 1997.

"While clearly this is good news in the long term, inevitably it just shows what a desperate situation the economy is in at the moment, and the fact that they're having to use historically drastic action to try to turn things around," said Henk Potts, strategist at Barclays stockbrokers.

Banks were standout losers on the day, with Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland down between about 4 and 10 percent.

Lloyds said it would cut its standard variable rate on mortgages to 5 percent from 6.5 percent after the Bank of England slashed interest rates by 150 basis points to 3 percent.