U.K.'s FTSE 100 Index Falls, Extends Drop From 2007 High to 20%

By Adam Haigh

July 3 (Bloomberg) -- The U.K.'s FTSE 100 Index extended its decline from last year's high to 20 percent, the common definition of a bear market, after credit losses and the worst housing slump in 30 years dimmed the earnings outlook for banks and retailers.

The measure of companies from Barclays Plc and HBOS Plc to Marks & Spencer Group Plc slid 1 percent to 5,371.30 as of 8:01 a.m. in London, bringing its retreat since June 15, 2007, to 20.2 percent.

Barclays, Britain's fourth-biggest bank, tumbled to the lowest since 1998 this year as the collapse of the U.S. subprime mortgage market spurred lenders to sell shares to replenish capital. Marks & Spencer, the U.K.'s largest clothing retailer, slid 57 percent as sales dropped the most since 2005 and record oil prices pushed consumer confidence down to a level last seen during the London riots 18 years ago.

``Banks and financial stocks have taken hits and caution remains with regard to further credit writedowns,'' said Richard Hunter, London-based head of U.K. equities at Hargreaves Lansdown Stockbrokers, a unit of Hargreaves Lansdown Plc, which oversees $21.5 billion. ``The U.K. economy is in a fairly parlous state with the oil and food prices at their highs.''

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To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net