RTRS: FTSE eases as HSBC leads banks lower; oils gain
Britain's leading share index slipped early on Wednesday as heavyweight HSBC (HSBA.L) fell on concerns of capital increase and dividend cut though oil producers boosted by firmer crude lent support.
By 0844 GMT, the FTSE 100 .FTSE was down 40.98 points, or 0.9 percent, at 4,358.17, on course for extending its losses to a sixth straight session. The UK benchmark is down 1.7 percent so far this month and had fallen more than 31 percent last year, its worst annual drop since its launch in 1984.
HSBC (HSBA.L) dragged the banking sector lower after Morgan Stanley said Europe's biggest bank may have to raise as much as $30 billion in capital and halve its dividend as earnings were likely to deteriorate more than expected [ID:nN13416165].
HSBC shares were down 6 percent.
"There does seem to be more concern with regard to further fundraising appearing to be sweeping the sector almost globally," said Keith Bowman, an equity strategist at Hargreaves Lansdown.
"We have seen a number of disposals from the likes of Citibank and RBS which have underlined the need to still raise capital."
Also in the sector, Barclays (BARC.L) is cutting over 2,100 jobs across its investment banking and investment management units, or about 7 percent of their staff, a person familiar with the matter said on Tuesday [ID:nLD703560]. Its stock slipped 5.2 percent.
Royal Bank of Scotland (RBS.L), HBOS (HBOS.L) and Standard Chartered (STAN.L) were also lower.
Meanwhile, the UK government is considering creating a so-called bad bank to absorb toxic assets, reported the Daily Telegraph on Wednesday citing banking sources [ID:nLD552737].
Britain on Wednesday launched a scheme to guarantee billions of pounds of loans to small and medium-sized companies as pressure grows on the government to fight a deepening recession.
