FTSE makes modest gain despite HSBC news

The London market made slight headway today despite more hefty writedowns for banking giant HSBC.

The London market made slight headway today despite more hefty writedowns for banking giant HSBC.

Europe’s largest bank reported a 28% slump in first half profits thanks to nearly $14bn worth of bad debt and credit crunch linked charges.

The group’s shares dipped 1%, but with gains elsewhere the wider FTSE 100 Index managed to add 17.9 points to 5372.6 at the mid-session.

HSBC spoke of the “most difficult financial markets for several decades” as it unveiled the losses on investments hit by the credit crunch and at its troubled US consumer business.

But the bank’s global spread still helped it deliver pre-tax profits of $10.3bn, and shares were down 10.25p at 826.75p.

Other major rivals were mixed following the announcement, with Halifax Bank of Scotland up 1.25p to 303.5p and Lloyds TSB 2p lighter at 298p.

Among the risers, telecoms group BT, was 3.2p better at 174.5p after traders decided the stock looked oversold following last week’s poorly-received interims.

Broadcaster ITV also edged up after reports of looming job cuts at the firm as part of a cost-cutting exercise. Shares were up 0.6p to 43.4p.

Several retailers were also consolidating gains seen over recent weeks. Sainsbury’s added 6.25p to 327p, and Morrison 5.75p ahead at 270.5p.

Oil giants BP and Royal Dutch Shell were holding on to gains despite oil prices easing back slightly from the 126 dollar a barrel mark. BP added 7p to 528.25p and Royal Dutch Shell was up 25p to 1775p.

Nuclear power firm British Energy, whose £12 billion takeover by French player EDF collapsed on Friday, gained 15p to 715p on revived hopes of a merger with Centrica or a higher offer from EDF. British Gas owner Centrica, which confirmed a merger was an option, saw its shares rise nearly 2%, or 2.25p, to 302.25p.

But falls for heavyweight miners offset these gains, led by Eurasian Natural Resources – 55p cheaper at 1001p and the Footsie’s leading faller.

Second-tier stocks were helped by takeover interest. Imperial Energy led the FTSE 250 with a 9% rise, or 94p, to 1168p after confirming a second bid approach.

It was closely followed by pubs group Punch Taverns, up 18.25p to 275.75p, or nearly 7%, on weekend reports of interest from private equity firm CVC. All Bar One owner Mitchells & Butlers cheered 16.5p to 272p.

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