Further pressure on banking stocks and more mixed economic data combined to keep the FTSE 100 Index close to its opening mark today.
HSBC was one of the Footsie’s leading fallers – off 7% or 46.75p to 625.25p - as investors continued to speculate about the bank’s need to raise additional capital, possibly through a rights issue.
The wider London market trod water in the face of further signs of economic gloom, with the FTSE 100 Index up just 6.5 points at 4330.7 by the close.
Other banking shares were under pressure after the Bank of England’s deputy governor signalled that further capital injections may be required in the UK.
Royal Bank of Scotland, which is 58% owned by the Government, fell another 8% or 4p to 46.5p, while Barclays was down 5p at 140p and HBOS slipped 5% or 3.3p to 64.5p. Elsewhere in the financial sector, Standard Life lost 25p to 235p and fellow life and pensions firm Friends Provident declined 3.2p to 77.4p.
Investors were also watching shares in British Airways after the Heathrow-based carrier said it failed to strike a merger deal with Australia’s Qantas.
The collapse of the talks, which were revealed earlier this month, forced BA shares 4% lower at the open before the stock recovered to close half a penny higher at 172.5p.
Elsewhere, the cut in Opec production failed to boost shares in BP and Royal Dutch Shell after oil prices remained close to 40 US dollars a barrel.
BP was 11p cheaper at 524.5p, while Royal Dutch Shell recovered from a poor start to edge 9p higher at 1748p.
The latest economic worries came from record public sector borrowing figures for November, although there was some cheer when retail sales figures showed an unexpected 0.3% increase last month.
The figures were greeted with scepticism by investors, with Marks & Spencer off 3.25p at 224.25p, Next unchanged at 1112p and Kingfisher down 2.1p at 138p.
In other corporate news, shares in transport group Arriva rose more than 5%, or 28.5p to 575.5p, after it said it continued to trade in line with expectations. The update contained a warning that fuel costs will rise £60 million next year, but investors were comforted by the robust trading performance.
Other rail operators were lifted by the update, with South West Trains firm Stagecoach up 6% or 7.4p at 136.4p and FirstGroup 15p stronger at 407.25p.
Gambling group Rank saw shares improve half a penny to 65p after it reported a 1% improvement in like-for-like sales for the past 15 weeks, compared with a 7% fall over the first 50 weeks of the financial year.
The biggest Footsie risers were Fresnillo up 14p at 195.5p, Shire ahead 61p at 998.5p, British American Tobacco up 102p at 1730p and Centrica ahead 14p at 255p.
The biggest fallers were Standard Life down 25p at 235p, Royal Bank of Scotland off 4p at 46.5p, Old Mutual down 3.7p at 47.6p and HSBC off 46.75p at 625.25p.