The Footsie 100 is down 7.5 at 4037 after an hour's trading.
The slip comes after yesterday's 200-plus, or 4.7 per cent, slide after the Footsie was hit by poor manufacturing data from the US and the UK, and disappointing results from a number of heavyweight companies.
Lloyds TSB slid 3 per cent, off 15p to 571p, as it released interim figures slightly below forecast, although profits remained stable.
The group also warned it was battling against "unprecedented" market turmoil and revealed a sharp rise in the amount set aside to cover potential bad debts.
Barclays, which saw shares slide yesterday as it revealed a 43 per cent hike in its bad debt cover, continued to fall, off 17p at 430p.
Royal Bank of Scotland was down 47p at £14.78, Northern Rock off 7p at 640p and HBOS down 17.5p at 677.5p.
British Airways also slipped back, down 4.25p at 145.75p, as it cautioned that revenues this year were likely to be below last year's figure.
But a mix of shares were making gains, including old-economy stocks such as retailers and power companies.
Retailers, which were hurt by recent poor high street figures, started bouncing back with Argos-owner GUS up 10p at 460p, Next rising 18p to 848p, Marks & Spencer 5p ahead at 333p and Sainsbury rising 4.75p at 306.5p.