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Gulf Times: FTSE slides by 3% on Citi, ‘recession’: ‘Royal Dutch Shell dropped more than 3%’

Published: Wednesday, 16 January, 2008, 01:55 AM Doha Time
 
LONDON: Britain’s top shares dropped 3% yesterday, with European and US stocks tumbling after Citigroup reported its first quarterly loss and weak US retail sales data inflamed fears of a US recession.

The FTSE 100, which has lost nearly 7% so far this year on fears of a US recession, ended yesterday’s trading down 3.1%, or 190.1 points, at 6,025.6.

In Paris the CAC 40 lost 2.83% to finish at 5,250.82 while in Frankfurt the Dax gave up 2.14% to close at 7,566.38.

The UK benchmark index registered both its lowest close and biggest daily percentage loss since mid-August 2007.

Major national stock indexes fell across Europe, with the Pan-European FTSEurofirst down more than 2%. Wall Street also posted heavy losses. “There are few words of comfort really for equity investors under these circumstances,” said Peter Dixon, an economist at Commerzbank.

“It is looking like the US is sliding into recession, there’s no doubt about it… I think we’ll be able to make that definitive call when we get a bit more data.”

UK banks took a beating after Citigroup reported $10bn in quarterly losses, prompting the company to cut its dividend and 4,200 jobs.

Citi also raised $14.5bn in fresh capital, but the bank’s shares still shed more than 7% by 1652 GMT on Tuesday. The bank posted its first quarterly loss since its creation in 1998, hurt by write-downs for exposure to subprime mortgages and other risky debt.

“That just brings the issues of financials back into the spotlight,” Dixon said of Citigroup’s results.

HSBC dropped 4.8% after Goldman Sachs added the global banking group to its Asia conviction sell list.

Lloyds TSB eased 4.5%, Royal Bank of Scotland lost 5.9%, Alliance & Leicester fell 4.8% and Standard Chartered dropped 3.8%.

Northern Rock, Britain’s most prominent casualty of the global credit market ructions, fell more than 16%.

The stricken lender’s chairman told shareholders that he expects to announce the outcome of a review of the bank’s strategy by mid-February. Its shareholders voted to restrict the powers of the bank’s management to issue new shares and only narrowly failed to approve a second key proposal to restrict asset sales.

Oil shares also suffered as crude prices eased on concerns over the outlook for the global economy. FTSE heavyweight BP lost 4% and its rival Royal Dutch Shell dropped more than 3%.

Miners also weighed as copper prices slid 3%. Concerns over the US economy were stoked after the US Commerce Department said retail sales unexpectedly fell in December, implying costlier energy and slumping housing prices were deterring spending during the holiday shopping season.

Britain’s biggest retailer Tesco fell 3.1% after it showed it was not immune to UK consumer caution at Christmas, reporting a slowdown in core sales at home while international growth surged.

But fellow supermarket group Sainsbury advanced 1.8% after Goldman upgraded its rating on the stock to “buy” from “neutral” and added it to its conviction list. – Reuters, AFP

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=195942&version=1&template_id=48&parent_id=28

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