February 21, 2017 / 10:35 AM / 8 months ago

HSBC drags Britain's FTSE lower

(ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

* FTSE 100 down 0.2 pct

* HSBC down 6.3 percent after profit slump

* Mediclinic down after Middle East revenue drops

* Oil services firm Wood Group top mid-cap faller

* FTSE 350 banks index heads for worst day since Brexit

By Helen Reid

LONDON, Feb 21 (Reuters) - British shares lost 0.2 percent on Tuesday, weighed by banking stocks as a week of full-year earnings releases for major listed banks began with HSBC’s profit slump.

Britain’s blue-chip FTSE index was down 0.2 percent, with HSBC, the first bank to report earnings this week, down 6.5 percent, heading for its worst day in 18 months after its results. The bank has a more than 6 percent weighting on the index.

HSBC kickstarted a string of major bank earnings updates by announcing a 62 percent slump in profits for 2016, falling short of analysts’ estimates due to writedowns from restructuring.

“The group flagged multiple headwinds (totaling $3 billion) for 2017. We believe the key question is to what extent the group will be able to offset these through volume growth,” said Goldman Sachs analysts in a note.

HSBC shares had rallied 70 percent from April 2016 to Monday’s close.

Hargreaves Lansdown and Standard Chartered Bank tracked HSBC lower. Hargreaves Lansdown was also smarting from a downgrade to “underperform” by Bernstein.

The FTSE 350 banking index .FTNMX8350 was down 3.7 percent, headed for its worst day since the Brexit referendum aftermath at the end of June 2016. Lloyds, Barclays, RBS and Standard Chartered will post full-year results in the coming days.

“It will be interesting to see how the other banks perform, because HSBC might have a competitive advantage because of its Asia focus and diversification,” said Ipek Ozkardeskaya of LCG Capital.

Mediclinic was down 4.7 percent after the South African private healthcare provider said it expected a drop in revenue and margins at its Middle East business.

Miners Anglo American and Fresnillo were among top fallers, despite a solid results update from the former.

Anglo American posted a 25 percent profit increase in results, saying it would resume dividends by the end of 2017. It had cut net debt to $8.5 billion, and said it would sell further assets only to sharpen its focus, rather than because it needed the money.

“We are encouraged by free cash flow, deleveraging and diamonds. However, near term we are concerned Anglo is vulnerable to negative spot price momentum and South Africa headwinds,” wrote UBS analyst Myles Allsop in a note.

The stock was down 1.8 percent. Announcing a wind-down of asset sales could be raising investors’ concerns about the strength of Anglo’s balance sheet, Ozkardeskaya said.

Rolls-Royce was the top gainer in the blue-chip index, maintaining Monday’s momentum after a Goldman Sachs upgrade to “buy”. Educational publisher Sage Group was also a top gainer, benefiting from Stifel starting coverage on the stock with a “buy” rating, up 2.3 percent.

Oil services company Wood Group was the worst performing on the mid-cap FTSE 250 index, down 7.8 percent and headed for its biggest one-day drop since July 2011, after it posted a 62 percent fall in full-year profit, missing market estimates, citing a challenging oil and gas market. (Reporting by Helen Reid; Editing by Alison Williams)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below