A warning that earnings forecasts could plunge again saw the banking sector battered by another wave of selling.

HBOS, down 13.9 per cent to 74½p, Royal Bank of Scotland, off 12.4 per cent at 44.7p, and Lloyds TSB, 10.2 per cent weaker at 149p, all sank further below the price at which they have pitched their respective state-backed fund raisings, as investors digested a bearish research report from Citigroup.