The FTSE 100 fell just under the 5,000 mark in early trading, down 1.44% to 4998.5, as investors reacted to falls for global markets in the US and Asia overnight.

Industry commentators say Aviva could set its sights on arch-rival Prudential, which is still recovering from its failed $20bn takeover of AIG's Asian business.

Barack Obama and David Cameron said stricken oil giant BP should "remain a strong and stable company".

UK banks could be under further pressure to curb lending after the G20 drafted rules to force them to bolster balance sheets by as much as £130bn.

Income seekers face an even tougher environment following a Bank of England warning that UK banks will have to slash dividends for years to come.

The US Federal Reserve voted to hold interest rates at record lows as it admitted Europe's debt problems could slow American economic growth.

A member of the Bank of England's Monetary Policy Committee (MPC) has called for a rise in interest rates for the first time in almost two years.

Chancellor George Osborne warned yesterday tough action to cut the deficit is "unavoidable" to ensure Britain is not on the "road to ruin".

The new Government has announced plans for a total shake-up of financial services regulation to conclude in 2012, which is also the deadline for IFAs to meet RDR requirements.

Aegon UK has denied a report suggesting its Dutch parent is preparing to offload its British life and pensions business for £1.5bn.