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Financial stocks slide as FTSE ends over 100 down

This article is more than 15 years old

HBOS led a major sell-off of financial stocks today after revealing an increase in bad debts on mortgages and unsecured lending.

On the day when HBOS shareholders voted to be taken over by Lloyds TSB, the company's shares plunged.

The rest of the UK's banks saw their shares fall too, while sentiment across the market suffered from the US's failure to rescue its stricken US car industry.

The FTSE 100 ended 108.34 points lower at 4280.34, with nine of the top ten fallers from the financial sector.

HBOS recorded the largest percentage decline in the blue-chip index, with shares down 23% or 20.1p to close at 67.5p.

Lloyds TSB's fortunes were little better than its merger partner's, as it slid nearly 18% or 28.1p to 129.9p.

Royal Bank of Scotland dropped 15% or 10p to 56.1p, some way below the 65.5p at which the government bought its 58% stake.

And Barclays, which preferred to tap Middle East investors for funds rather than accept government support, was down more than 8% or 13.1p at 148p.

"The news is bearish across the sector, in our view – we would continue to value the safety of HSBC alone," said Collins Stewart analyst Alex Potter.

HSBC feel less steeply, closing 17p down at 733p.

Other financial stocks having a tough time included hedge fund management group Man, down 45p at 245.75p, and the private equity firm 3i, which lost 22.75p to 310.5p.

In the FTSE 250, Travis Perkins, the builders' merchants and DIY supplies group, gained 19p to 301.5p as it reported "difficult conditions" but said things had not got worse since a trading update in October.

Panmure analysts said they were "not ready to turn positive due to continuing market uncertainty".

Struggling sports retailer JJB fell 16% or 1.49p to 7.75p after Citigroup issued a sell note and cut its price target from 20p to just 1p.

JJB is battling to meet debt repayment deadlines and recently warned it would miss profit forecasts unless it prospers in the January sales.
Sports Direct, which has taken a 21% stake in JJB, also slipped today, down 2.5p at 32p.

Looking ahead to interim results on Wednesday, Panmure analyst Philip Dorgan predicted a fall in profits and a cut in the dividend.

Shares in Carphone Warehouse slipped 6.5p to 90p, bringing the curtain down on the week in which co-founder David Ross quit as deputy chairman after using his shares in Carphone and three other companies to guarantee personal loans.

Having already relinquished his involvement with Carphone, National Express and Big Yellow Group, Ross today stepped down as chairman of Cosalt, the Grimsby-based marine safety equipment company where his father and grandfather were chairman before him.

Although his fellow directors asked him to quit the chairmanship over the use of his shares, they said his actions were "wholly unintentional" and have agreed for him to stay on the board.

Shares in Cosalt were unchanged at 129.5p.

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