Share prices plunged last night as doubts mounted over Wednesday's move by central banks to combat the credit crisis.

The FTSE 100 Index dropped three per cent, shedding 195.6 points to close at 6364.2, after the initial cheer surrounding the co-ordinated global effort faded, with investors fearing measures will not be enough.

Banks were the hardest hit as further losses relating to the credit crunch and collapse of the US sub-prime mortgage market were revealed.

High street bank HBOS disclosed a £180 million hit and fuelled concerns over pressure on margins from the tightening squeeze in money markets.

And in the US, three major banks including Wachovia and Bank of America, warned losses from investments contaminated by US sub-prime mortgages will worsen.

The bad news left markets unconvinced the steps taken by the Bank of England and central banks would prevent the crisis deepening, despite praise from Prime Minister Gordon Brown.

Stocks had risen sharply immediately after Wednesday's joint announcement, with the Footsie staging a 140-point turnaround to end the day up 23 points.

Central banks in Europe and the US had announced that they would pump additional reserves into their respective systems.

The Bank of England said it was a measure to "address the elevated pressures in short-term funding markets" amid concerns that banks will hoard cash as they seek to balance their books for the year end, causing a New Year credit freeze.

The Bank will up the amount of money auctioned on December 18 and January 15 from £2.85 billion to £11.35 billion and said it would look at whether further measures were necessary after January "in light of market conditions at the time".

Experts said the credit crisis would only end when commercial banks trusted each other again.

Thomas Jordan of Swiss National Bank said: "As long as uncertainty with respect to the scope of the credit problems exists the disruptions on the money market are likely to persist.

"Central banks cannot compensate for this lack of confidence simply by injecting additional liquidity."