Funding worries hit Barclays shares

Barclays shares have tumbled by up to 8 per cent to a two-and-a-half year low after a FTSE 100 sell-off continued for a second day.Market talk of funding worries and speculation it is telling analysts to trim profit forecasts sent ripples through an already nervous market.Stock markets worldwide have continued to fall as banking shares were sold on fresh fears over the US sub-prime lending crisis.There are concerns that financial institutions have been more exposed to the global credit crunch than previously thought.Investors remain jittery about the exposure of banks, particularly those with strong investment banking arms, to the credit market turmoil that has battered financial markets, increasing borrowing costs and drying up liquidity.The Bank of England refused to comment on Barclays, but said it had not made any emergency loans via its penalty-rate standing lending facility on Thursday.On Friday, the FTSE 100 was down 1 per cent, or 72 points, after losing 135 points the previous dayRoyal Bank of Scotland, the other major UK bank with a substantial investment banking business, was down 5 per cent, having earlier touched lows of 473.25p, its lowest level since August 2004.Alliance & Leicester, a mortgage bank whose exposure to wholesale funding has seen it battered in the wake of the credit crunch and the near-collapse of Northern Rock, was down 4.85 per cent.Earlier, Japan's benchmark Nikkei 225 index tumbled 352 points - or 2 per cent - mirroring a fall of almost 3 per cent for the Dow Jones Industrial Average last night.Wall Street also reacted to surging oil prices and a smaller-than-expected gain in US consumer spending for September.Meanwhile, the pound hit fresh 26-year highs against the dollar this week and stands at more than $2.08 while the euro has also hit a fresh high against the US currency.© Independent Television News Limited 2007. All rights reserved.

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ITN | November 2, 2007

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