U.K. Stocks Fall for Sixth Day; HSBC Declines on Profit Outlook

By Adam Haigh

Jan. 14 (Bloomberg) -- U.K. stocks fell for a sixth day, the longest losing streak in more than two years, on concern HSBC Holdings Plc may need to raise capital and cut its dividend.

HSBC Holdings Plc lost 8.2 percent after Morgan Stanley analysts predicted the U.K.’s largest bank may have to raise as much as $30 billion and halve its dividend as earnings drop. Man Group Plc extended a six-day slide, slumping 6.3 percent, as the biggest publicly traded hedge-fund manager said assets under management fell 21 percent in the last three months of 2008.

“HSBC is the real drag on the market today and it looks like people are moving their positions away from the banking sector as worries about profits persist,” Joshua Raymond, Market Strategist at City Index in London, said in a phone interview. The Man Group results “make you think confidence just still isn’t there.”

The FTSE 100 lost 90.48, or 2.1 percent, to 4,308.67 as of 12:10 p.m. in London. The gauge erased its 2009 gains this week, after tumbling 31 percent in 2008, as concern the economic recession will eat into earnings gained pace.

The FTSE All-Share Index dropped 2.1 percent today and Ireland’s ISEQ Index slid 2 percent.

HSBC slid 8.2 percent to 587.5 pence. The bank’s profit is likely to fall “sharply” this year and won’t recover until 2011 at the earliest, analysts including Michael Helsby and Anil Agarwal wrote in a note yesterday. A stock sale would be the first for HSBC since the financial crisis started in 2007, forcing rival banks and brokers worldwide to raise more than $800 billion.

Great Depression

Stocks on the FTSE 100 extended earlier losses after Germany’s Deutsche Bank AG reported a 4.8 billion euros ($6.3 billion) fourth quarter, a sign the worst financial crisis since the Great Depression is deepening.

Gareth Hewett, an HSBC spokesman in Hong Kong, declined to comment.

Separately, lenders declined across Europe after Deutsche Bank AG, Germany’s biggest bank, reported a loss of about 4.8 billion euros ($6.3 billion) in the fourth quarter after the worst financial crisis since the Great Depression pummeled its debt and equity trading results.

Man Group fell 6.3 percent to 211 pence after saying it had $53.3 billion under management as of Dec. 31, down from $67.6 billion at the end of September and $61 billion at the beginning of November. The stock has fallen 27 percent in the past six days as brokerages from UBS AG to Citigroup Inc. recommended clients sell the shares.

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

Amec Plc (AMEC LN) gained 24 pence, or 4.5 percent, to 561.5. The service provider to energy producers from the Arctic to Australia said full-year pretax profit is likely to exceed 200 million pounds ($292 million).

FirstGroup Plc (FGP LN) tumbled 50.75 pence, or 12 percent, to 370.5 after Britain’s biggest train operator said strong growth rates in the rail industry are being affected by the weakening economy.

JJB Sports Plc (JJB LN) tumbled 2.25 pence, or 16 percent, to 11.5 after saying sales at stores open a year for the five weeks to Jan. 11 declined 6.8 percent, and said it’s expecting a pretax loss of as much as 10 million pounds for the fiscal year ended Jan. 29.

Punch Taverns Plc (PUB LN) slid 11 pence, or 19 percent, to 46.75. The U.K.’s largest pub owner said sales declined as Britons cut back on nights out at bars amid a deteriorating economic outlook.

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