Banks dragged the FTSE 100 lower on Tuesday after Morgan Stanley warned clients that the sector was only a third of the way through a bear market that started in February.

“We see many similarities between the banks today and the life assurance sector back in 2000-03,” analyst Michael Helsby said as he took up coverage of the sector after his move from rival broker Fox Pitt Kelton. “This time it is the credit markets that have burst, with far-reaching ramifications for the UK banks sector.”