Hedge fund managers said they might start buying bank stocks following the UK Government's attempt to rescue the system and a cut in interest rates, which was cautiously welcomed by asset managers, businesses and bankers, although most investors are still trying to work out whether the moves go far enough to make banks an attractive investment opportunity again.

Philip Hardy, who runs UK asset manager Polar Capital's UK equity hedge fund, said he would now consider buying UK bank shares. But he warned further falls in bank shares and stock markets are possible: "We are in a recession. Businesses have cut back significantly on capital expenditure and consumers have cut back significantly."