UK Stocks Fall, HSBC Rises 5%

123jump.com Staff
06 Apr, 2009
New York City

In London trading stocks closed lower tracking losses in miners and financials. HSBC jumped 5% after it managed to place 97% of its rights offering and raise

[R]1:00PM New York, 6:00PM London - HSBC shareholders buy 97% of stocks in rights issue. Bank of England enters currency swap arrangement with central banks.[/R]

In London trading stocks fell marginally led by commodity stocks as gold prices dipped and crude oil prices fell.

Market Sentiment

In London trading FSTE 100 index fell 0.9% or 36.13 to 3,998.04.

Of the FTSE 100 index shares, 30 rose, 70 dropped, and 2 were unchanged. Rio Tinto led decliners in the index shares with a fall of 11.3% after gold prices plunged $22 to $874 per ounce.

HSBC Shareholders Buy 97% of Rights Issue

HSBC reported today that shareholders purchased 97% stocks in the country’s £12.85 billion share issue, while the remaining 172.7 million shares were sold at 448 per share.

However in the U.K. shares were sold for 254 pence each. In Hong Kong 98% of investors subscribed to the cash call.

The lender noted that its aggressive selling of shares involved 350 institutional investors.

JPMorgan Chase & Co. and Goldman Sachs underwrote the share sale, while Credit Suisse Group AG, BNP Paribas SA, RBS, Citigroup Inc., Societe Generale SA, Intesa Sanpaolo SpA, Nomura and ING Groep NV also underwrote the offering.

HSBC is pooling its resources to prop up its balance sheet and fund its expansion programs.

HSBC in the last one year of trading has declined 50% in London trading and 65% in Hong Kong trading. For months the bank declined that it needed to raise additional capital. Its North American lending operation reported $15.5 billion of losses in 2008.

The bank may need to raise more capital in the next eighteen months as the losses at its U.S. operations are expected to rise.

Bank of England Enters into Currency Swap Arrangements

Bank of England today joined the European Central Bank, the Federal Reserve, the Bank of Japan, and the Swiss National Bank in announcing swap arrangements that will enable the provision of foreign currency liquidity by the Federal Reserve to US financial institutions.

Under the arrangement the euro, yen, sterling and Swiss francs will be provided to the Federal Reserve via swap agreements with the relevant central banks if needed.

The swap arrangements run until October 30, 2009.

“The Bank of England has agreed that it would enter into arrangements to provide sterling liquidity to the Federal Reserve should it be required. The sterling would be provided via a swap arrangement with the Federal Reserve, similar to that which underpins the Bank of England''s US dollar repo operations,” said Bank of Japan.

Gainers & Losers

TUI Travel led gainers in the FTSE 100 index shares with a rise of 4.7% followed by gains in Centrica Plc of 4.6%, in BT Group of 4.4%, in HSBC of 3.7%, and British Land Co. of 3.4%.

HSBC increased after the lenders said in a statement that shareholders bought 97% of the company shares in the £12.85 billion cash call.

Rio Tinto led decliners in the FTSE 100 index shares with a decline of 11.3% followed by losses in Randgold Resources of 8.7%, in Kingfisher Plc of 6%, in Vedanta Resources of 5.9%, and Eurasian Natural of 5.6%.

Rio Tinto fell as gold prices shed $22 to $874 per ounce.