Mounting fears over the future of US investment bank Lehman Brothers sent UK banking stocks lower again yesterday.

Mounting fears over the future of US investment bank Lehman Brothers sent UK banking stocks lower again yesterday.

Lehman Brothers shares plunged again yesterday on Wall Street, during London trading hours, as doubts grew over its scramble to sell assets to shore up its balance sheet.

Goldman Sachs, regarded as the largest and strongest securities firm on Wall Street, was touted as a potential buyer of Lehman but sources familiar with the situation last night said this speculation was wide of the mark as integration of two big investment banks would be too disruptive.

The UK's FTSE-100 index of leading shares was showing losses of more than 100 points at one stage yesterday, before finishing 47.8 points weaker at 5318.4.

Shares in Bank of Scotland and Halifax parent HBOS dropped 13p, or more than 4%, to 286.75p. Royal Bank of Scotland shares fell 5.75p or 2.4%, to 234.25p.

Adding to the bleak sentiment, a poll published yesterday by Reuters showed the median probability attached by economists to a UK recession within the next 12 months has risen to 55% from 45% in a similar survey a month ago.

It is the first time this year that economists have signalled a belief that UK recession is more likely than not.

Both the European Commission and the Organisation for Economic Co-operation and Development are predicting the UK will fall into recession in the second half of this year with falls in gross domestic product in the third and fourth quarters.

Sterling rose against the euro yesterday, as the single currency fell further below the 80p mark. The euro was last night trading around 79.62p - about 0.3p weaker than its close in London on Wednesday.

However, the pound fell as far as $1.7448 against the US currency. This was its weakest level against the dollar since April 2006. It was last night trading around $1.7490 - down about half-a-cent on the day.