HBOS sees gains as other London banks decline

European equities markets were lower again Wednesday after they were not helped substantially by interest rate cuts from the European Central Bank, the Bank of England, Riksbank and others.

The ECB cut rates by half a percentage point to 3.75 percent, while the Bank of England lowered its rate to 4.5 percent, Riksbank of Sweden cut its rate to 4.25 percent, the US Federal Reserve cut its main rate to 1.5 percent and lowered its discount rate to banks to 1.75 percent, and the Bank of Canada cut its interest rate to 2.5 percent.

Also hurting equities was a new forecast from the International Monetary fund that the global economy will only grow by 3 percent next year, rather than by the 3.7 percent growth it predicted for 2009 in April.

In London, the FTSE 100 was down 5.18 percent to 4,366.69 while the FTSE 250 dropped 3.1 percent to 7,200.87.

Most banks were lower even after UK Prime Minister Gordon Brown said that the government will invest around £50 billion ($87 billion) in the banking system while the Bank of England will make at least £200 billion available to UK banks to boost liquidity.

However, HBOS (LSE: HBOS) added 24.47 percent to lead the 100 and Royal Bank of Scotland (LSE: RBS; NYSE: RBS PRM) was up 0.78 percent.

The oil sector and miners declined on dropping commodities prices and most retailers were lower on the session.

The FTSE Eurofirst 300 was down 6.14 percent to 941.93 as the IBEX fell 5.2 percent to 10,297.6, the Dax was 5.88 percent lower to 5,013.62 and the CAC-40 dropped 6.31 percent to 3,496.89, with only four winners on the CAC-40 and only two gainers on the Dax.

Equities markets in the Asia-Pacific region saw sharp declines again Wednesday, with Indonesia halting trade for the first time since a bombing of the exchange in 2000 after the Jakarta Composite dropped 10.38 percent to 1,451.67.

Declines came on fears that more banks will fail globally and that the market for Asian exports will decline.

In Tokyo, the Nikkei 225 was down 9.38 percent to 9,203.32, a decline of nearly 1,000 points, the biggest one-day decline for the index in 21 years, which erased $250 billion in value on the session.

The Topix index fell 8.04 percent to 399.01 and the Mothers market of small and mid caps dropped 10.65 percent to 271.68.

Japanese car and truck makers saw significant declines after Nikko Citigroup cut its recommendation on Toyota (TYO: 7203; NYSE: TM; LSE: TYT) from “buy” to “sell” and on Hino Motors (TYO: 7205), which makes trucks for Toyota, from “buy” to “hold”.

Hino Motors and Isuzu (TYO: 7202) each dropped 14 percent on the session while Toyota was down 12 percent and Honda (TYO: 7267; NYSE: HMC) was 10 percent lower.

Banks were also lower, with Sumitomo Mitsui Financial (TYO: 8316) down 6.5 percent while Mizuho Financial (TYO: 8411; NYSE: MFG) dropped 7.7 percent.

The Shanghai Composite was 3.04 percent lower to 2,092.22 and India’s Sensex was down 3.14 percent to 11,328.36, while in Australia the Sydney Ordinaries fell 4.96 percent to 4,369.8 and the S&P/ASX200 was 4.99 percent lower to 4,388.1.

The Taiex was down 5.76 percent to 5,206.4, the Kospi fell 5.81 percent to 1,286.69, the Straits Times Index was 6.61 percent lower to 2,033.61 and Hong Kong’s Hang Seng dropped 8.17 percent to 15,431.73.

The Hong Kong index, which lost almost 1,400 points on the session, has seen over half of its value disappear since it closed at a record high of 31,638.22 on 30 October last year.

In mid-afternoon trade on Wall Street the Dow Jones Industrial Average was up 0.76 percent to 9,519.11 while the Nasdaq Composite had added 2.13 percent to 1,792.25 and the S&P 500 had gained 1.47 percent to 1,010.85.

Some shares in the technology sector and for commodities-related companies were targets of bargain-hunters after share prices fell to lows not seen in years, but the retail sector was mixed after some department stores and luxury retailers reported sharp declines in sales.

Saks (NYSE: SKS) dropped 9.03 percent and JCPenney (NYSE: JCP) fell 3.85 percent, but Wal-Mart (NYSE: WMT) and Costco (NAS: COST) were higher on reports that while sales did not reach Wall Street’s expectations, they had grown during the month.

Costco added 0.47 percent while Wal-Mart was up 2.46 percent.

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