Battle for world's financial center becomes one of survival

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."