U.K. Stocks Decline, Led by Banks; HSBC, RBS, Brixton Retreat

By Sarah Jones and Sarah Thompson

Aug. 19 (Bloomberg) -- U.K. stocks fell to the lowest in two weeks, led by banks after JPMorgan Chase & Co. said Lehman Brothers Holdings Inc. may write down about $4 billion in credit- related investments this quarter as the mortgage market deteriorates.

HSBC Holdings Plc, Europe's largest bank, fell to the lowest this month. Royal Bank of Scotland Group Plc, the U.K.'s second- biggest bank, declined the most since Aug. 4.

Brixton Plc led shares of real-estate companies lower after the U.K.'s biggest owner of industrial buildings said the ``apocalyptic'' lyrics of a Bob Dylan song best described the country's commercial-property market.

The FTSE 100 Index retreated 83.5, or 1.5 percent, to 5,366.7 at 12:53 p.m. in London. The measure has lost 17 percent this year as asset writedowns and credit losses at financial companies topped $500 billion worldwide. The FTSE All-Share Index lost 1.6 percent today, while Ireland's ISEQ Index dropped 3.6 percent.

``The banks are struggling and still facing problems,'' said Espen Furnes, an Oslo-based fund manager at Storebrand Asset Management, which has the equivalent of $48 billion. ``It's far too early to be bullish and it's likely that we're going to see a further weakening in balance sheets over the next 12 months.''

HSBC fell 3.6 percent to 827 pence and RBS slid 4.8 percent to 217.5. Barclays Plc, the U.K.'s third-largest bank, decreased 4.8 percent to 326.25.

Lehman will probably post losses in the third quarter following the deterioration in the mortgage market, New York- based analysts Kenneth Worthington and Funda Akarsu wrote in a report to investors dated yesterday.

`General Worries'

The analysts lowered their per-share estimate for the third quarter to a loss of $3.30 from a profit of 35 cents previously. Lehman will likely keep the Neuberger Berman LLC asset-management unit, the analysts added.

``There are general worries about the health of the U.S. financial sector,'' said Matt Buckland, a trader at CMC Markets in London.

Brixton fell 6.1 percent to 232.75. Quoting the first verse of Dylan's ``All Along the Watchtower,'' Brixton said a lack of property sales has led to ``too much confusion'' in the market and no one knows ``what any of it is worth.'' The company said: ``There is no `way out' of this impasse -- yet.''

Warehouses, offices and stores in the U.K. have lost value each month since June 2007, following 11 years of gains, as loans for purchasing properties became more expensive and harder to obtain. Brixton's warehouses depreciated by 10 percent in the first half, leading to a net loss of 235 million pounds ($438 million), Brixton said today on its Web site.

Hammerson Plc, the U.K. owner of Birmingham's Bullring and London's Brent Cross shopping centers, plunged 5.2 percent to 875.5.

The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.

U.K. companies:

Findel Plc (FDL LN) jumped 11.75 pence, or 6.5 percent, to 192. The U.K. mail order company whose shares have plunged almost 70 percent this year said full-year revenue rose as consumers bought more goods by post. Revenue for the period through Aug. 15 advanced 2 percent compared with a year earlier. Home shopping sales gained 3 percent.

Inmarsat Plc (ISAT LN) jumped 12.5 pence, or 2.6 percent, to 500.5. The U.K. satellite company whose biggest shareholder is considering a takeover said consolidation would be ``good'' for the industry as it could allow companies to offer more services and cut costs.

Minmet Plc (MNT LN) added 1.75 pence, or 47 percent, to 5.5 pence. The mining company based in Dublin said today that it's in discussions that might lead to a takeover offer for the company.

Vodafone Group Plc (VOD LN) decreased 1.45 pence, or 1 percent, to 138.4. The company will increase prices for some calls in the U.K. beginning Sept. 1 to boost revenue as regulators aim to cut some fees.

Woolworths Group Plc (WLW LN) fell 0.27 pence, or 3.7 percent, to 7.12. The grouping led by Baugur Group Hf, which was rebuffed by the board of Woolworths, has contacted other shareholders of the U.K. retailer in an effort to force its directors to open discussions, the Financial Times reported.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net; Sarah Thompson in London at sthompson17@bloomberg.net.