By Jamie McGeever and Patrick Graham
LONDON (Reuters) - Sterling plunged to its lowest in three decades and the value of London's big banks sank by the most since the 2008 financial crisis on Friday as Britain's shock vote to leave the European Union sparked turmoil on global financial markets.
The Bank of England's promise to provide 250 billion pounds of support and extra supplies of foreign currency if needed steadied the ship somewhat, halving initial losses for the FTSE 100 and the pound.
But sterling was still down more than 6 percent against the dollar by mid-morning in London, its biggest fall since the system of free-floating exchange rates was introduced in the early 1970s.
That reflected widespread alarm in the financial community over the uncertainty and volatility likely to be unleashed by the Brexit vote. London bankers who had worked through the night said it was the most volatile day's trading they had ever seen.
"The word 'unprecedented' is often used too much, and people often reach for the hyperbole. But this is truly unprecedented," said Steven Major, head of global rates strategy at HSBC in London.
HSBC cut its forecast for the pound to $1.20 and 92 pence per euro by the end of this year, and several other banks said they expected the value of the British currency to fall further.
Traders said there had been strong buyers of sterling in Asia, however -- possibly including central bank reserve managers stocking up on the pound while it was at its cheapest in decades.
Sterling fell as low as $1.3305
The cost of insuring against swings in the sterling/dollar exchange rate jumped to 53.375 percent
"The pound fell a long way very quickly and the talk was that the speculative guys sold it on the first results last night and then bought it back," said Richard Benson, co-head of portfolio management at currency fund Millennium Global.
HELP
On stock markets, shares of Britain's big banks took the biggest hit, with HSBC (L:HSBA), Barclays (L:BARC) and Royal Bank of Scotland (L:RBS) all falling around 17 percent.
Ten-year UK government bond yields fell to 1.09 percent from around 1.38 percent late Thursday
But the biggest swings were in the foreign exchange market, dwarfing those seen on 'Black Wednesday' in 1992, when billionaire financier George Soros was instrumental in pushing the pound out of the Exchange Rate Mechanism.
"I'm one of the people who was here the last time we were trading at $1.35. It's back to the future, we're back to where we were in 1985," said Nick Parsons, co-head of global currency strategy at NAB.
"We've had a 10 percent decline in six hours. That's simply extraordinary. And a vote to leave provides an existential crisis for Europe."
All the major international and British banks in London, including Citi (N:C) Deutsche Bank (DE:DBKGn), JPMorgan (N:JPM), Goldman Sachs (N:GS) and Barclays (L:BARC) had traders either working through the night or on call.
On Citi's foreign exchange desk in London, dealers were only accepting voice orders and only desk heads had the authority to approve trades, according to a source at the bank.
Banks had warned clients about volatile trading conditions around the results which may lead to large gaps in prices. Barclays stopped accepting new "stop loss" orders as of 0600 GMT, an extremely rare move for one of the big six banks that dominate the world's biggest financial market.