HBOS leads banks higher in London

European equities markets were higher Friday on speculation that major central banks will cut interest rates soon, after the president of the European Central Bank said that Bank officials discussed cutting rates before deciding yesterday to hold steady at 4.25 percent for the present.

Gains also came on indications that the US House of Representatives is now ready to pass a rescue plan for the US financial sector, with a vote scheduled after European markets closed for the day.

In London, the FTSE 100 was up 2.26 percent to 4,980.25 while the FTSE 250 gained 0.38 percent to 7,995.54.

Banks were higher in London, with HBOS (LSE: HBOS) leading the 100 with a gain of 17.87 percent while Lloyds TSB (LSE: LLOY) was up 10.78 percent.

British Airways (LSE: BAY; NYSE: BAB) had the worst day on the 100 with a decline of 7.13 percent after it reported declines in first-class and business-class travelers., while the London Stock Exchange Group dropped 2.9 percent after Credit Suisse downgraded the exchange to “underperform”.

The FTSE Eurofirst 300 was up 2.94 percent to 1,088.65 as the Dax added 2.41 percent to 5,797.03, the CAC-40 was 2.96 percent higher to 4,080.75 and the IBEX gained 3.78 percent to 11,418.5.

Hypo Real Estate Holding (FWB: HRX) was up 41 percent after the European Commission ruled that its rescue by the German government conforms to EU competition rules.

The banking sector was higher, led by BNP Paribas (Euronext: BNP; TYO: 8665) with a gain of 9.42 percent on the CAC-40 and Deutsche Bank’s (FWB: DBK; NYSE: DB) gain of 6.68 percent on the Dax.

Steel makers saw gains, but there were declines among airlines and the semiconductors sector.

Asia-Pacific equities markets were lower to end the week Friday on concerns that even if a bailout plan for the US financial sector is passed by Congress, it will not be sufficient to hold off a recession.

These worries were made worse by new data showing that US factory orders were down by 4 percent in August and the Labor Department reported that first-time unemployment claims were up to 497,000 last week in the United States.

The region-wide MSCI Asia Pacific Index was down 2.1 percent on the day and it dropped 7.7 percent this week.

In Tokyo, the Nikkei 225 was down 1.94 percent to 10,938.14 while the Topix index fell 2.69 percent to 1,047.97 and the Mothers market of small and mid-caps dropped 4.87 percent to 355.65.

Carmakers were lower, with Toyota (TYO: 7203; NYSE: TM; LSE: TYT) down 5.3 percent and Honda, which earns half its profits in North America, (TYO: 7206; NYSE: HMC) dropping 5.5 percent.

The consumer finance sector, makers of construction machinery and the oil sector all saw declines, but some retailers saw gains.

In Australia, the S&P/ASX200 was down 1.38 percent to 4,695.4 while the Sydney Ordinaries dropped 1.49 percent to 4,702.8 as miners saw steep declines, while elsewhere in the region the Straits Times Index fell 2.81 percent to 2,297.12, the Hang Seng was 2.9 percent lower to 17,682.4 and India’s Sensex dropped 4.05 percent to 12,526.32.

The Shanghai Composite and the Kopsi were both closed for the session.

On Wall Street, the Dow Jones Industrial Average was down by 152 points, dropping 1.45 percent to 10,330.72 just a few minutes before floor trade closed in New York after having been up by more than 300 points just before the US House of Representatives approved the bailout plan okayed by the Senate earlier this week.

At the same time, the Nasdaq Composite was down 1.33 percent to 1,950.46 while the S&P 500 had dropped 1.19 percent to 1,101.02.

A controversy erupted in the financial sector after a report that Wells Fargo (NYSE: WFC) had agreed to buy Wachovia (NYSE: WB) for $15.1 billion after Citigroup (NYSE: C) demanded that Wachovia honor its agreement earlier in the week to by acquired by Citigroup for $2.16 billion in a deal brokered by the Federal Deposit Insurance Corporation.

The FDIC said it will support the Citigroup deal.

Just before the close of trade, Wachovia was up by 56.78 percent while Wells Fargo was 1.02 percent lower and Citigroup had declined by 18.09 percent.

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