Newspaper article The Evening Standard (London, England)

UK Banks Feel the Pain as BoA Shares Plunge by 11%

Newspaper article The Evening Standard (London, England)

UK Banks Feel the Pain as BoA Shares Plunge by 11%

Article excerpt


THE banking crisis appears to be far from resolved despite the best efforts of politicians. Bank of America shares slumped a further 11% to a 19-year low in New York overnight, following bearish comments by the bank about its own prospects.

That stretched the shares' current losing streak to five days, deepening the gloom already enveloping the banking sector on both sides of the Atlantic.

Royal Bank of Scotland, which has made [pounds sterling]3 billion of fresh funding available to small businesses, gave back yesterday's gains, easing 0.6p to 20.2p.

Credit Suisse has cut its target price for RBS to 40p. Lloyds Banking Group retreated 2.7p to 92.5p while HSBC lost 16'p at 528p.

Shares generally drifted lower in response to an overnight sell-off on Wall Street. Investors chose to hold fire ahead of today's vote on interest rates by the Bank of England monetary policy committee, and the FTSE 100 index fell 57.90 points to 4170.70.

The market gave a cautious thumbsup to results from Unilever, but the shares slid 91p to 1392p with traders uncertain about prospects. However, they liked a 25% rise in fourth-quarter profits at BG Group, and the shares rose 59p to 1010p.

Tullow Oil dipped 9p to 681p despite its latest drilling report confirming the success of its Kingfisher appraisal well in Uganda. Some estimates claim the well has oil reserves of up to 200 million barrels. Heritage Oil, which operates the Kingfisher well, put on 4-p at 215-p.

The gains achieved by UK housebuilders yesterday on signs of a revival in the US housing market were in danger of being given back today after a grim trading update from Bellway, down 11'p at 601p. The group reported a 38% dive in sales, and warned that margins may drop as much as 50% as it acts to reduce debts by up to [pounds sterling]120 million by July. Shore Capital said Bellway is still struggling with challenging trading conditions, but the balance sheet does not require urgent funding. It has repeated its sell rating. Rival Berkeley fell 23'p to 776'p while Persimmon shed 7p to 311'p and Taylor Wimpey retreated 1-p to 14'p. …

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