Market risks hit 2008 highs - survey

London - UK market participants see risks of major crisis at their highest since just before the collapse of Lehman Brothers, with a eurozone breakup their top worry, a Bank of England survey showed on Tuesday.

The Bank's twice-yearly systemic risk survey of 68 firms showed that the perceived probability of a future "high impact" event was at its highest level since July 2008, when the survey began and just weeks before the US lender's demise which sent the global financial system into near meltdown.

The latest survey, covering the second half of 2011, showed that 54% of respondents believe the probability of a short-term high-impact event was very high or high.

Confidence in the UK financial stability over the next three years dropped to its lowest since the second half of 2009, the survey showed.

Over 60% of respondents cited sovereign risk as their top worry.

"The specific concerns cited in the sovereign risk category related mainly to the euro area or countries in the euro area," the bank's survey said.

"As for particular euro-area risks, reponses included for example a breakup or collapse of the euro, disorderly debt restructuring, sovereign default and contagion," the survey added.

Only the risk of a financial institution failure or distress was new among the top five worries which also included economic downturn, funding risk, and risks around regulation and taxes.

The survey is part of the bank's wider efforts to spot risks earlier, a core lesson of the financial crisis, so that action can be taken before markets destabilise.

The survey was conducted in the month to October 21 and since then sovereign debt stresses in the eurozone have moved from peripheral countries like Greece to core nations of Italy, France and Spain.