How these endlessly dueling rivals, which, just a few months ago, were contentedly crashing antlers over who laid claim to global financial primacy, are now locked in a race to the bottom.

The London-New York tug-of-war for bragging rights as the world's preeminent financial center is now a race to the bottom.

Six months after Bear Stearns Cos. was bailed out by JPMorgan Chase & Co. and a week after Lehman Brothers Holdings Inc. filed for bankruptcy, both cities are bleeding. While it will take months to determine which will be hardest hit, New York has so far lost more financial-services jobs and London's luxury housing market has taken the first hit.

``London and New York will be hit comparatively harder than other financial centers,'' said Mark Yeandle, a risk consultant at London-based Z/Yen Group and lead author of the Global Financial Centres Index, which ranks the competitiveness of such cities. ``New York, up until a month ago, seemed to be recovering more quickly than London, but we have to wait and see what sort of fallout the more recent turmoil will generate.''

The market value of London's publicly traded financial firms has dropped by 99.4 billion pounds ($182.3 billion) in the past 12 months, cutting their worth by about 25 percent. Their counterparts in New York have lost $477 billion in market capitalization, or 37 percent.

``We won't see the big Christmas parties this year,'' says Sinead Mallozzi, chief executive officer of the Michelin-starred Sketch restaurant in London's West End.

In New York, Vincent Alessi, general manager of Bobby Van's Steakhouse on Broad Street, says the same. ``It's tense,'' he says. ``But my bar business is doing great.''

Continue reading on bloomberg.com

Next article » It’s Getting Unruly

Previous article « Fed Extends Definition Of ‘Collateral’