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 crashed 4%, or 175.76 points, to 4212.93, giving back much of the hard-earned gains of recent days and wiping more than [pounds sterling]42 billion off the value of top stocks.

Only nine of the top flight were in the black largely defensive stocks after talks to win bipartisan support in the Senate for the automakers' rescue plan collapsed.

HBOS's dire update on trading meant banking stocks were the worst hit, making them the three biggest fallers on the Footsie. HBOS claimed the wooden spoon, down almost 22%, or 19.2p, at 68.4p.

Meanwhile, Royal Bank of Scotland was 121/2p cheaper at 53.6p, leaving the UK taxpayer almost [pounds sterling]2.8 billion out of pocket from its majority stake, Lloyds TSB was off 27.1p at 130.9p and Barclays dropped 17.6p to 143.5p.

Even HSBC was suffering after Dresdner Kleinwort said the banking giant will cut its dividend in 2009, and warned that earnings per share will fall by a fifth. Its shares lost 50p to 700p.

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. Traders have been saying for weeks that JJB is a prime candidate to join Woolworths on the High Street scrapheap. Today its shares sank 1.34p to 7.9p.

Doorstep lender Cattles was the biggest mid-cap loser, sliding 91/4p to 203/4p, a record low.

Broker Numis Securities has suspended coverage of its shares, saying they are either worth 200p or nothing.

It all hinges on whether the company, which lends to subprime customers turned away by High Street banks, gets its much-desired banking licence allowing it to take retail deposits. …

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