Blue chip stocks ended the session in negative territory today as concerns over the US economy added to HSBC’s profits gloom.
The FTSE 100 Index reversed earlier gains after a poor start to trading on Wall Street, closing down 34.5 points at 5320.2.
The Dow Jones Industrial Average fell nearly 1% at one stage as figures revealed a sharp fall in US consumer spending on soaring inflation pressures.
London’s Footsie fell in response, compounding hefty falls among banks, while miners and oil majors also dived on lower gold and oil prices.
HSBC’s results drove a number of banks lower after it reported a 28% slump in first half profits, thanks to nearly 14 billion US dollars (£7.1bn) worth of bad debt and credit crunch linked charges.
The group’s shares fell 1%, off 9p at 828p, as it spoke of the “most difficult financial markets for several decades” on unveiling 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 10.3 billion US dollars (£5.2bn).
Other major rivals fell too, with Halifax Bank of Scotland down 2.5p at 299.75p and Lloyds TSB 6.75p lighter at 293.25p.
Among the risers, several retailers were consolidating gains seen over recent weeks. Sainsbury’s added 6.75p to 327.5p, Tesco gained 6.1p to 367.3p and Morrison was 3.25p ahead at 268p.
Telecoms group BT, was 0.7p better off at 172p 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 0.7p to 43.5p.
Oil giants BP and Royal Dutch Shell failed to hold on to gains as oil prices eased to near 124 US dollars a barrel on the disappointing US consumer spending data and its implications for the economy. BP shed 3.25p to 518p and Royal Dutch Shell was 14p down at 1736p.
Nuclear power firm British Energy, whose £12 billion takeover by French player EDF collapsed on Friday, gained 18p to 718p – 3% – on revived hopes of a merger with Centrica or a higher offer from EDF.
Falls for heavyweight miners offset earlier gains, with the sector’s declines led by Kazakhmys – 135p cheaper at 1288p and the Footsie’s leading faller.
Second-tier stocks were helped by takeover interest. Punch Taverns, up 54.5p to 312p, or more than 21%, led the FTSE 250 winners on weekend reports of interest from private equity firm CVC. All Bar One owner Mitchells & Butlers meanwhile cheered 25.25p to 280.75p, a rise of 10%.
Imperial Energy followed close behind with an 8% rise, or 86p, to 1160p after confirming a second bid approach in as many months.
The biggest Footsie risers were Thomson Reuters up 61p at 1415p, Wolseley ahead 13.5p at 353.25p, International Power up 14p at 417.75p and Enterprise Inns up 9p at 320.25p.
The biggest Footsie fallers were Kazakhmys down 135p at 1288p, Vedanta Resources off 156p at 1755p, Antofagasta off 44p at 503.5p and Xstrata down 203p at 3243p.