UPDATE 2-FTSE 100 sinks over 3% on lockdown fears, banks slide

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* HSBC, StanC, Barclays drop more than 5%
* UK considers second lockdown on rising COVID-19 cases
* Rolls-Royce tumbles on confirming plans to raise equity
* FTSE 100 down 3.4%, FTSE 250 off 4%

(Updates to close)
By Shashank Nayar and Susan Mathew
Sept 21 (Reuters) - The FTSE 100 marked its worst day in
more than three months on Monday as HSBC and Standard Chartered
slid on reports the banks were among those that moved allegedly
illicit funds, while travel stocks plummeted on fears of more
coronavirus-related lockdowns.
The blue-chip FTSE 100 .FTSE sank 3.4% to a two-week low,
with British Airways-owner IAG ICAG.L plunging 12.1% on news
that Prime Minister Boris Johnson was pondering a second
national lockdown to contain a surge in COVID-19 cases.
An index of travel and leisure stocks .FTNMX5750 , already
among the biggest decliners this year, tumbled 5.2%. The mid-cap
FTSE 250 .FTMC fell 4% to a seven-week low, with pub operators
plunging on the possibility of new
restrictions. "Even if (the lockdowns) aren't as severe as those
introduced in March, (they) will have a big economic impact,"
said Russ Mould, investment director at AJ Bell.
J.P. Morgan Asset Management's global market strategist, Mike
Bell said the government's furlough scheme, or something
similar, will have to be extended to prevent a significant rise
in unemployment.
A rally in UK stock markets has petered out this month as
the spread of the novel coronavirus threatens a nascent business
recovery, with banking stocks taking a further hit from the Bank
of England's announcement that it was looking at negative
interest rates.
The FTSE banking index .FTNMX8350 fell another 5.3% on
Monday after media reports said lenders including Barclays
BARC.L , HSBC HSBA.L and Standard Chartered STAN.L moved
large sums of allegedly illicit funds over nearly two decades
despite red flags about the origins of the money. HSBC, already trading at decade lows, slid 5.3%, while
StanChart dropped nearly 6% to its lowest since 1998. Barclays
tumbled 5.4%.
Aero-engine maker Rolls-Royce RR.L plunged 10.8% to its
lowest since 2004 after it confirmed it was considering a rights
issue of up to 2.5 billion pounds ($3.23 billion).