FTSE 100 index down 0.2%; HSBC Holdings, HBOS, Lloyds TSB decline
LONDON (MarketWatch) -- HSBC Holdings and other lenders fell in a modestly lower London on Wednesday, as investors took on some more bad news on profit trends for Europe's banking sector.
The losses came after French lender BNP Paribas (FR:013110: news , chart , profile ) warned its investment banking arm had posted a loss for the first 11 months of the year and said it could shed around 800 workers in the division. See full story.
Overall, the U.K. FTSE 100 index (UK:UKX: news , chart , profile ) fell 0.2%, or 7.82 points, to 4,301.09 in a volatile session. Other European shares were lower. See Europe Markets. See Indications.
Stocks had started the session in the green after the U.S. Federal Reserve slashed U.S. interest rates to just above zero after the European close on Tuesday and promised to try an array of new economic measures to stimulate spending. See full story.
The economic backdrop is just as gloomy in the U.K. with retailers recording a ninth consecutive month of falling year-on-year sales volume in December, according to the Confederation of British Industry.
Additionally, the number of persons claiming British jobless benefits rose by 75,700 in November, the Office for National Statistics reported Wednesday. The unemployment rate in the three months ending in October rose to 6%, up from 5.6% in the previous three months.
"Going forward, further Monetary Policy Committee easing is likely. We expect a 50 basis point cut at the January meeting, as a staging post on the way to the fuller consideration of the outlook at the February Inflation Report meeting. Unless financial conditions improve sharply for the February meeting, further easing -- and perhaps unconventional measures -- will be on the agenda at that stage," said Michael Saunders, economist at Citigroup.
Miners, oil firms higher
Mineral extractors and oil producers provided a bit of support for the top index, with shares of BHP Billiton shares up 2.5% and shares up 1.6%.
Oil futures climbed, with light sweet crude futures up 50 cents at $44.11 a barrel.
The Organization of the Petroleum Exporting Countries agreed Wednesday to cut oil production by 2 million barrels a day, said Saudi Arabian oil minister Ali al-Naimi according to a Dow Jones Newswires report. Naimi made his comments to reporters as a meeting of OPEC got underway, the report added. Light crude for January delivery rose $1.27 in electronic trading to $44.87 a barrel.
However, shares in energy services company John Wood Group (UK:WG: news , chart , profile ) fell 7.5%.
It said that its performance for 2008 is anticipated to be in line with market expectations, but that the outlook for 2009 is more challenging. Indications are that there will be a reduction in spending by clients, with a knock-on impact on service company activity, the firm said.
Retailer Sports Direct (UK:SPD: news , chart , profile ) rose 10.5% outside the top index..
Net profit for the 6 months to Oct. 28 jumped to 65.9 million pounds ($102.6 million) from 13 million pounds as revenue rose 2.9% to 687.7 million pounds. Excluding one-time gains, underlying earnings before interest, taxes, depreciation and amortization were up 7.4% at 89.8 million pounds.
The group said trading conditions continue to be challenging, but added it remains confident with its forecast for underlying earnings of 135 million pounds for fiscal 2009.
