U.K. Stocks Drop for a Second Day, Led by HSBC, Rio, Xstrata

By Sarah Thompson

Nov. 18 (Bloomberg) -- U.K. stocks fell for a second day, led by banks on mounting concern the slowdown in the economy will damp earnings and metals prices declined.

HSBC Holdings Plc, Europe's biggest bank, and Barclays Group Plc led shares of financial companies lower. Rio Tinto Group, the world's third-largest mining company, and Xstrata Plc retreated.

The benchmark FTSE 100 Index slid 65.77, or 1.6 percent, to 4,066.39 at 12:36 p.m. in London. The FTSE All-Share Index decreased 1.7 percent and Ireland's ISEQ Index retreated 3.4 percent.

``Banking stocks are once again being shot to ribbons,'' said David Buik, a market analyst at BGC Partners in London. There's speculation of ``more skeletons lurking in the overall sector. Nervous investors are also steering clear of the miners.''

The FTSE 100 index has dropped 37 percent this year as asset writedowns and credit losses at financial companies topped $965 billion worldwide and sparked the worst banking crisis since the Great Depression.

The U.K. inflation rate fell more than economists forecast in October, recording the steepest drop in at least 11 years and giving the Bank of England scope to cut interest rates further as the economy slides into a recession.

HSBC slid 4.8 percent to 674.75 pence. Barclays Plc lost 5.4 percent to 145.8 after the U.K.'s second-biggest bank offered institutional investors as much as 500 million pounds ($750 million) of stock reserved for Persian Gulf funds and put its board up for re-election.

Rio Tinto lost 4.8 percent to 2,341 pence. Xstrata, the world's fourth-largest nickel producer, decreased 12 percent to 774. Copper lost 1.3 percent in London, falling for a second day in a row. Lead, nickel, tin and zinc also fell.

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

U.K. companies:

Burberry Group Plc (BRBY LN) dropped 20 pence, or 10 percent, to 180.25. The maker of $2,200 Warrior handbags said sales to department stores and third-party distributors will probably drop in the second half of the fiscal year as economies weaken, particularly in the U.S.

Carphone Warehouse Group Plc (CPW LN), fell 21 pence, or, 16 percent, to 109.25. Europe's largest mobile-phone retailer won't sell the TalkTalk Internet unit as it considers splitting into two listed companies.

EasyJet Plc (EZJ LN) lost 45.5 pence, or 16 percent, to 231. Europe's second-biggest discount airline said full-year profit fell 45 percent as higher fuel expenses eroded earnings.

Laird Group Plc (LRD LN) slumped 39 pence, or 37 percent, to 64.5. The world's biggest maker of electromagnetic shields for mobile phones said full-year profit will ``significantly'' miss forecasts as demand for electronic goods plunges.

Lonmin Plc (LMI LN) decreased 35.5 pence, or 4.1 percent, to 838.5. The world's third-largest platinum producer will close mines, halt expansion and cut jobs after the price of the metal plunged.

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