AV, OML go from gains to losses in London

Equities markets in Europe saw declines Friday on delays in the approval of the US bailout plan and on the failure of US savings and loan Washington Mutual (NYSE: WM).

The delays in approval for the plan to buy up bad loans from banks came as some Republicans refused to support the plan, while the WaMu failure was the biggest in US history and resulted in a takeover by the Federal Deposit Insurance Corporation.

The takeover was followed by sale of WaMu to JPMorgan Chase (NYSE: JPM; TYO: 8634) for $1.9 billion.

In London, the FTSE 100 was down 2.09 percent to 5,088.47 while the FTSE 250 dropped 1.9 percent to 8,274.44.

Insurers were lower on broker downgrades as Aviva (LSE: AV) fell 3.4 percent on a Merrill Lynch (NYSE: MER; TYO: 8675) downgrade from “buy to “neutral” while Old Mutual (LSE: OML; JSE: OLOML) dropped 9.7 percent, the worst performance of the day on the 100, after Merrill Lynch cut its rating from “neutral” to “underperform”.

Banks were lower, with mortgage lender Bradford & Bingley (LSE: BB) down 5.88 percent while Royal Bank of Scotland (LSE: RBS; NYSE: RBS PRM) fell 5.67 percent and Lloyds TSB (LSE: LLOY) dropped 8.14 percent.

Miners, the oil sector, and most retailers were also lower.

The Eurofirst 300 was down 1.83 percent to 1,104.79 while the IBEX fell 0.44 percent to 11,387.9, the CAC-40 was 1.5 percent lower to 4,163.38 and the Dax dropped 1.77 percent to 6,063.5.

Again, most banks saw declines, with Fortis (EuronextBRU: FORB; Euronext AMS: FORA; LuxSE: FOR) down 21 percent in Brussels while Dexia (Euronext: DX) dropped 7.53 percent for the worst performance on the CAC-40.

The semiconductors sector and steel makers were lower, while Volkswagen (FWB: VOW) managed the only gain on the Dax as it added 1.07 percent.

Asia-Pacific region equities markets saw declines as well.

In Tokyo, the Nikkei 225 was down 0.94 percent to 11,893.16 while the Topix index fell 0.53 percent to 1,147.89 and the Mothers market dropped 1.93 percent to 427.27.

Some banks managed small gains.

Sumitomo Mitusi (TYO: 8316) added 0.3 percent and Mizuho Financial (TYO: 8411; NSYE: MFG) gained 1.1 percent, but that was down from its earlier advance of 2.6 percent over Thursday’s close.

Traders and steelmakers were lower on declining demand for steel from China, with steel producer JFE Holdings (TYO: 5411) down 3.5 percent as trader Mitsui & Company (TYO: 8031) fell by 5 percent.

Gainers on the session included Takeda Pharmaceutical (TYO: 4502) with an advance of 4.2 percent and mobile phone operator KDDI (TYO: 9433), which gained 5 percent.

Elsewhere in the region, the Shanghai Composite was down 0.16 percent to 2,293.78 while in Australia the S&P/ASX200 was 0.46 percent lower to 4,904.8 and the Sydney Ordinaries fell 0.53 percent to 4,934.6.

The Hang Seng was down 1.33 percent to 18,682.09, the Straits Times Index fell 1.34 percent to 2,411.46, the Kospi was 1.68 percent lower to 1,476.33, the Taiex dropped 2.16 percent to 5,929.63 and the Sensex was down 3.28 percent to 13,102.18.

Among banks in the region, China Merchants Bank (SEHK: 3968; SSE: 600036) was down 2.4 percent while Woori Finance Holdings (KRX: 053000; NYSE: WF) dropped 7.5 percent.

In afternoon trade in New York the Dow Jones Industrial Average had added 0.31 percent to 11,056.07 after JPMorgan Chase raised $10 billion in a stock sale and on the insistence by legislators that they will be able to agree on a bailout plan, but the Nasdaq Composite was down 0.62 percent to 2,173.03 and the S&P had dropped 0.33 percent to 1,205.19.

JP Morgan was up 5.1 percent on events and after it was upgraded from “under perform” to “neutral” and Bank of America (NYSE: BAC) gained 3.8 percent.

On the other hand, Wachovia (NYSE: WB) was down by around 36 percent on fears that it could go the way of Washington Mutual and National City Corp (NYSE: NCC), a regional bank based in Cleveland, Ohio, was down as much as 60 percent at one point but had recovered to a decline of about 30 percent by 2 p.m. in New York.

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