HBOS drops nearly 20 percent in London

European equities markets were lower Wednesday after US housing starts declined in August and on declines among miners as investors worried about demand for metals.

In London the FTSE 100 was 2.25 percent lower to 4,912.4 while the FTSE 250 dropped 1.18 percent to 8,309.8.

The top five decliners on the 100 were all from either the banking or mining sector, with HBOS (LSE: HBOS) having the worst day with a decline of 19.18 percent and miner Kazakhmys down 10.76 percent on the session.

But not all banks and miners were lower as Barclays Bank (LSE: BARC; NYSE: BCS; TYO: 8642) added 3.17 percent and iron miner Ferrexpo (LSE: FXPO) added 4.28 percent and gold miner Randgold (LSE: RRS; NAS: GOLD) gained 7.67 percent.

Insurers were mixed despite the announced bailout for US insurer American International Group (NYSE: AIG), while the oil and retail sectors were also mixed.

The FTSE Eurofirst 300 was down 1.95 percent to 1,070.1 while the Dax fell 1.75 percent to 5,860.98, the CAC-40 was 2.14 percent lower to 4,000.11 and the IBEX dropped 2.29 percent to 10,661.4.

German builder Hochtief (FWB: HOT) was down 4.6 percent while French construction materials group Lafarge (Euronext: LG; NYSE: LR) fell 4.74 percent on the bad news on home building in the US

There were only three winners on the CAC-40, with food processor Danone (Euronext: BN) up 2.12 percent, insurer Axa (Euronext: CS; NYSE: AXA) up 0.3 percent and oil group Total (Euronext: FP; NYSE: TOT) adding 0.14 percent.

German insurer Allianz (FWB: ALV; NYSE: AZ) added 4.52 percent on the Dax while carmaker Volkswagen (FWB: VOW) jumped 5.08 percent, but steel producers were lower as ThyssenKrupp (FWB: TKA; LSE: THK) fell 7.5 percent and ArcelorMittal (Euronext: MT; NYSE: MT; BMAD: MTS; LuxSE: MT) dropped 7.96 percent.

Most equities markets in the Asia-Pacific region were lower Wednesday as investors were not convinced that the rescue of AIG by the US government will do much to alleviate the global credit crisis.

The plan calls for the Federal Reserve to loan the insurer $85 billion and to take in return a 79.9 percent stake in the company.

The financial sector in the region was not helped by a report that Australia’s Macquarie Group (ASX: MQG) could be having trouble financing its debt.

Macquarie was down 7.8 percent although a spokesperson for the group called the report “misleading”, while China Merchants Bank (SEHK: 3968; SSE: 600036) fell 7.7 percent in Hong Kong trade on its exposure to Lehman Brothers (NYSE: LEH) debt.

Tokyo’s markets saw gains, with the Nikkei 225 up 1.21 percent to 11,749.79 while the Topix index added 0.35 percent to 1,121.43 and the Mothers market gained 1.37 percent to 440.03.

Insurers were up after the announcement of the AIG rescue plan with Sompo Japan Insurance (TYO: 8755) up 2.1 percent while Sony Financial Holdings (TYO: 8729) was 3.1 percent higher and Tokio Marine Holdings (TYO: 8766), Japan’s biggest insurer, gained 5.3 percent.

Shinsei Bank (TYO: 8303) dropped 10 percent after it said it is exposed to around ¥38 billion ($358 million) in Lehman Brothers’ debt, but the pharmaceuticals sector and food-related shares saw gains.

Other gainers in the region included the Taiex, which was up 0.77 percent to 5,800.87, and South Korea’s Kospi, which added 2.7 percent to 1,425.26.

In Australia, however, the S&P/ASX200 was down 0.6 percent to 4,722.2 and the Sydney Ordinaries fell 0.63 percent to 4,769.7 while the Straits Times Index was 1.71 percent lower to 2,419.29 in Singapore, the Sensex was down 1.89 percent to 13,262.9, the Shanghai Composite fell 2.9 percent to 1,929.05 and the Hang Seng dropped 3.63 percent to 17,637.19.

At just past 1:30 p.m. in New York, Wall Street was substantially lower.

The Dow Jones Industrial Average had fallen 3.23 percent to 10,702.07 while the Nasdaq Composite was down 4.01 percent to 3,119.31 percent and the S&P 500 had dropped 3.94 percent to 1,165.74.

Lehman Brothers (NYSE: LEH), which declared bankruptcy earlier in the week, was down 56.7 percent while the two remaining independent US securities groups, Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) had fallen 23.95 percent and 36.9 percent respectively after an analyst cut their profits estimates.

AIG had dropped 38.7 percent despite the plan to rescue it, while homebuilders were down on new data from the Commerce Department showing that housing starts declined by 6.2 percent in August.

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