HSBC leads banking shares down despite bumper profit
BRITAIN’S leading share index ended lower yesterday, pressured by weakness in banking issues after international leaders said more money was needed from Europe to help ease the region’s debt crisis, and with heavyweight HSBC falling after its results.
Eurozone countries pledged at a meeting of finance leaders of G20 economic powers on Sunday to reassess the strength of their bailout fund next month, reminding investors the debt crisis is far from over.
Banks bore the brunt of the blue-chip selling, unsettled by the G20 statement and having already been forced to take a significant haircut on Greek debt.
HSBC was the worst off, down 3.7 per cent, as Europe’s biggest bank posted a $21.9bn (£13.8bn) profit for 2011, the best outturn by a western bank so far, but below expectations for more than $22bn.
Standard Chartered shed 1.6 per cent, with the emerging markets-focused lender due to close out the sector reporting season with full-year numbers tomorrow.
State-owned Lloyds Banking Group and Royal Bank of Scotland, which both revealed massive full-year losses last week, fell 2.3 per cent and 2.1 per cent respectively.
Lloyds and RBS – both bailed out by the taxpayer – may access the European Central Bank’s three-year, low-interest loans facility this week, according to reports yesterday.
At the close, the FTSE 100 index was down 19.58 points, or 0.3 per cent at 5,915.55, though it rallied late on to recapture the 5,900 level relinquished earlier in the session.
“The FTSE remains in the doldrums off the back of subdued trading, low volume and further euro zone concerns,” said Andrew Crook, trader at Sucden Financial Private Clients.
“Even encouraging US monthly home sales figures appear to be a case of too little too late.”
Miners staged a late turnaround in London, in tandem with firmer metal prices after US data, as demand hopes were revived by the signs of strength in the world’s biggest economy, with copper up 0.2 per cent.
Integrated oils were also higher, although crude prices stayed weak after recent strength.
BP provided the main boost for the sector, up 1.1 per cent, on hopes of a more positive outcome for the oil major after its Gulf of Mexico oil spill trial was delayed to allow the firm to try to cut a deal.
A batch of blue-chip corporate news also provided some focus for investors yesterday.
Bunzl was the top FTSE 100 gainer, ahead 2.3 per cent and hitting a record high after the packaging firm posted a bigger-than-expected 11 per cent rise in yearly pre-tax profit.
India-focused refiner and power generator Essar Energy was the biggest blue-chip faller, plunging 14.6 per cent as it missed full-year earnings forecasts.
“Mild selling is fine. In fact, selling outweighing buying is a critical part of any freely operating marketplace, a characteristic that participants rely upon for accurate valuations and the ability to earn value,” said David White, trader at Spreadex.
“If, as some analysts contest, 2012 is a year of opportunity for global equities, any sustained ascent will invariably include days like today that are as inconvenient to the bulls as they are essential to keep a strengthening market in check.”