Newspaper article The Evening Standard (London, England)

Footsie Pain as US Rescue Plan for Carmakers Fails

Newspaper article The Evening Standard (London, England)

Footsie Pain as US Rescue Plan for Carmakers Fails

Article excerpt

Byline: ROSAMUND URWIN

SHARES tanked in London today after the bailout of the "big three" US car giants stalled and as banking stocks dived.

The FTSE 100 plunged 2.9%, or 125.87 points, to 4262.82, giving back much of the hard-earned gains of recent days and wiping around [pounds sterling]30 billion off the value of top stocks.

The benchmark index had been down by over 185 points mid-morning after talks to win bipartisan support in the Senate for the automakers' rescue plan collapsed. But shares recovered slightly as the US Treasury effectively said it would not allow the carmakers to fail.

HBOS's dire update on trading meant banking stocks were the worst hit, making them four of the five biggest fallers on the Footsie. HBOS claimed the wooden spoon, down more than a fifth, or 17.8p, at 69.8p. Meanwhile, Royal Bank of Scotland was 9.7p cheaper at 56.3p, leaving the UK taxpayer over [pounds sterling]2 billion out of pocket, Lloyds TSB was off 27.6p at 130.5p and Barclays dropped 16.1p to 145p.

Even HSBC was suffering after Dresdner Kleinwort said it expects the banking giant to cut its dividend in 2009, and warned that earnings per share will fall by a fifth. Its shares lost 353/4p to 7143/4p.

In New York tonight, the Dow Jones plunged 148.23 points to 8416.86. But this was a much smaller sell-off than analysts had expected despite swathes of gloomy, albeit all-too-predictable, data out of the States. Investors were left chewing over the repercussions of news that the White House is considering diverting money from the Wall Street rescue fund to stave off bankruptcy filings among the automakers.

Could the banks blow the whistle on JJB Sports? Citigroup analyst Ben

Spruntulis set a target price of just a penny for the sportswear chain's shares and said the debt-laden group's fate appears to lie in the hands of lenders.

With trading deteriorating rapidly, Citi warns that chief executive Chris Ronnie will need to sell off more than just the health club division if the company is to meet its obligations to suppliers.

In a note titled "They think it's all over", Citi predicts the retailer will stay in the red for at least the next three years, reporting losses before tax of [pounds sterling]17 million in January 2009. …

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