The Bank of England today pumped another £5 billion into money markets in a bid to avert a new, devastating twist to the credit crunch which has already taken a severe toll on shares.

Just four days after a first £5 billion cash injection, the Bank doubled the weekly funding made available to lenders to £10.03 billion.

In a sign of the banks' growing difficulty to secure funding in wholesale markets, the money auction was nearly three times over-subscribed.

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The move came after the FTSE again failed to settle, plunging almost 60 points shortly after opening and plummeting still further after lunch to be down 82.5 at 5463.1. Investors remained jittery after rogue City traders yesterday made hundreds of millions of pounds amid a swirl of rumours about Britain's biggest mortgage lender.

Halifax Bank of Scotland (HBOS), which was at the centre of yesterday's financial storm, made tentative gains as bosses attempted to quash the rumours and ease investor nerves.

But a profit warning from investment bank Credit Suisse did little to help fragile sentiment, as did heavy overnight falls on Wall Street which saw the Dow Jones close down almost 300 points.

Global markets were also volatile, with the Hang Seng index in Hong Kong closing down 758.7 points at 21108.2 while the Straits Times index in Singapore was down 8.3 points to 2824.9.

Following the latest cash injection, experts immediately claimed it might not be enough to stave off even worse volatility.

Investec economist Philip Shaw said: "Given that overnight rates have generally remained above the Bank rate since Monday, the level of extra liquidity is a little disappointing."

Bank of England governor Mervyn King is now likely to face demands for yet more funding to be released in a meeting with banking chiefs later today.

The extraordinary events surrounding HBOS shares yesterday is also sure to feature on the agenda.

Its share price dropped as much as 20 per cent at one point yesterday after speculators began spreading malicious, false rumours about the bank's imminent implosion.

A single trader may have made £100 million from the collapse, which has been dubbed a "modern day bank robbery" and is being investigated by the Financial Services Authority (FSA).

The drama started to unfold at 8.31 when shares in HBOS began to wobble. What followed was one of the most remarkable morning's trading in recent stock market history.

• 8.33am: HBOS shares plunge as some traders launch a sudden raid on the stock. At the same time rumours about HBOS's solvency and demands for funding from the Bank of England start to sweep through the market.

• 8.51: HBOS's shares plunge to 400 ¼ p and the FTSE100 dives to 5570.

• 9.02: HBOS denies the rumours. A spokesman says it has an " exceptionally sound" balance sheet.

• 10.15: Bank of England press officers phone news organisations including the Evening Standard to kill off rumours of crisis meetings and HBOS cash shortfalls. HBOS shares start to recover.

• 12.30: Financial Services Authority says it is investigating suspicious trading in UK financial shares.

Britain's financial watchdog immediately launched a criminal investigation into the traders, who collectively helped to wipe more than £3billion off the bank's value.

The FSA warned them to stop exploiting jittery market conditions. The rumour-mongering is now known to have fuelled the extreme market turbulence of the last few days.

It also emerged today that a leading City investment bank has uncovered a £1.4 billion scam by rogue traders desperately trying to protect their bonuses.

Credit Suisse discovered the problem last month but today is the first time it has revealed that traders had cooked the books.

The collapse of HBOS, which has more than two million small shareholders, would be an almost unimaginably enormous financial disaster, hence the share price crash when the City was swamped with wild rumours that it was on the brink of disaster yesterday.

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