UK Banks, Miners Drag Index 2% Lower

123jump.com Staff
26 Sep, 2008
New York City

UK benchmark stock index fell 2% after banks and commodities related stocks decline. Weakening domestic economy, tight lending conditions and falling metal prices dragged market indexes lower. The demand for government intervention grew as bankers sought relief in the UK.

[R]1:00PM New York, 6:00PM London – Weakening domestic economy, tight lending conditions and falling metal prices dragged market indexes lower.[/R]

London stocks indexes plummeted led by financial stocks and commodity stocks as negotiations over the U.S. $700 billion package stalled. Metal prices also retreated.

Market Sentiment

In London trading FTSE 100 plunged 2.09% or 108.55 to 5,088.47.Of the 102 FTSE stocks 11 rose, and 91 declined. International Power led advancers in the index shares with a rise of 3.59%.

British banks in recent weeks have increased their demands for more government support as credit market volatility rises and mortgage lending falls. Prime Minister Brown and Chancellor of the Exchequer Alistair Darling remain ideologically opposed to using taxpayer’s money to bailout banks and brokerage firms.

Royal Bank of Scotland, HSBC, Bradford Bingley Plc and Lloyds TSB dropped more than 5%. Crude oil in London trading also declined more than $3 and dragged stocks of BP and Royal Dutch Shell.

Minerva Plc plunged 57% to 35 pence after the Dubai controlled real estate developer and investor abandoned its 258 million offer for the company.

HSBC Cuts 1,100 Jobs

Bloomberg News reported on its Web site today that HSBC''s Hong Kong-based spokesman Gareth Hewett said in a telephone interview today the lender has slashed 1,100 jobs in the global banking and markets division on a deepening financial crisis.

Hewett says the measure is being taken """"in light of the current global business and economic environment and out cautious outlook for 2009"""".

Gainers & Losers

International Power led advancers in the FTSE 100 index shares with a rise of 3.58% followed by rises in Sainsbury of 3.27%, in Centrica Plc of 1.55%, in TUI Travel of 1.38%, and Compass Group of 0.91%.

Old Mutual led decliners in the FTSE 100 index shares with a fall of 9.68% followed by losses in Lloyds TSB Group of 8.14%, in Autonomy Corp. of 7.73%, in Kazakhmys Plc of 7.32%, and Xstrata of 6.55%.

Old Mutual fell as the negotiations over the bailout plan stalled. HBOS declined 5.82% and Royal Bank of Scotland dipped 5.67% as a result.

Commodity stocks also fell as metal prices slumped. Crude oil for November delivery also declined to $104.25 a barrel. Antofagasta slipped 6.08%, Rio Tinto declined 5.96% and Vedanta Resources fell 5.81%.

Rio Tinto Group dropped 6% to 3,705 pence after it refused to negotiate with iron ore train drivers in Western Australia union which is likely to strike next week. The Pilbara Rail the subsidiary of Rio Tinto is likely to lose $2 million a day if the strike occurs.

Europe Markets Review

In London FTSE 100 Index closed lower 108.50 or 2.09% to 5,088.50, in Paris CAC 40 Index decreased 63.43 or 1.50% to close at 4,163.38 and in Frankfurt DAX index lower 109.53 or 1.77% to close at 6,063.50. In Zurich trading SMI decreased 129.97 or 1.87% to close at 6,815.52.