LLOY down 31 percent as banks decline globally

Bank stocks were lower globally Tuesday on fears that the recession will deepen after UK Prime Minister Gordon Brown proposed that his government put another £50 billion into his nation’s banking system, including a raised government stake in Royal Bank of Scotland (LSE: RBS; NYSE: RBS PRM) after the bank said it could lose a record amount this year.

RBS dropped 11.21 percent on the session, while Barclays Bank (LSE: BARC; NYSE: BCS; TYO: 8642) was down 17.16 percent and Lloyds Bank (LSE: LLOY) fell 31.08 percent, almost half of its value, to lead decliners on the FTSE 100.

The 100 was down 0.42 percent to 4,091.4 in London, while the FTSE 250 dropped 1.18 percent to 6,142.06.

Randgold (LSE: RRS; NAS: GOLD) led leaders on the 100 with a gain of 8.07 percent but most other miners were lower, while London’s drug-makers and the tobacco sector, both gained on the session.

The FTSE Eurofirst 300 fell 2.12 percent to 774.48 while the Dax was down 1.77 percent to 4,239.85, the CAC-40 was 2.15 percent lower to 2,925.28 and the IBEX dropped 2.57 percent to 8,276.5.

Banks in Europe also fell as Societe Generale (Euronext: GLE) dropped 13.67 percent to lead declines on the CAC-40, while BNP Paribas (Euronext: BNP; TYO: 8665) was down 13.33 percent, Credit Agricole (Euronext: ACA) fell 6.98 percent, Commerzbank (FWB: CBK) was 6.44 percent lower and Deutsche Bank (FWB: DBK; NYSE: DB) dropped 5.59 percent.

Tokyo’s banks also declined on the news from RBS, with Mitsubishi UFJ (TYO: 8306; NYSE: MTU) down 2.9 percent as Sumitomo Mitsui (TYO: 8316) fell 2.8 percent, Mizuho (TYO: 8411; NYSE: MFG) was 6.2 percent lower and Chuo Mitsui (TYO: 8309) dropped 7.3 percent after a broker downgrade from “hold” to “sell”.

Carmakers bucked the trend in Tokyo, with Toyota (TYO: 7203; NYSE: TM; LSE: TYT) up 2.3 percent after it announced that it will have a new company president while Honda (TYO: 7267; NYSE: HMC) added 1.9 percent and Nissan (TYO: 7201) gained 0.9 percent on comments from President-elect Barack Obama, to be sworn in later in the day in Washington, DC as the 44th US president, that he wants more hybrid cars to be produced.

Other exporters were hurt by gains in the yen.

In Tokyo, the Nikkei 225 was down 2.31 percent to 8,065.79 while the Topix index fell 1.55 percent to 805.03 and the Mothers market dropped 2.57 percent to 329.86.

Elsewhere in the region the Straits Times Index was down 1.35 percent to 1,723.37, the Kospi fell 2.07 percent to 1,126.81, the Sensex was 2.45 percent lower to 9,100.55, the Taiex dropped 2.84 percent to 4,242.61 and the Hang Seng was down 2.85 percent to 12,959.77.

In Australia, the Sydney Ordinaries dropped 3 percent to 3,425 while the S&P/ASX200 dropped 3.14 percent to 3,476.6

The Shanghai Composite managed to gain 0.37 percent to 1,994.11.

At around 1 p.m. in New York, nearly an hour after Barack Obama was sworn in as president, the Dow Jones Industrial Average had dropped 2 percent to 8,115.95 while the Nasdaq Composite was down 3.26 percent to 1,306.4 and the S&P 500 was 2.83 percent lower to 826.03 as US banks followed other global banks lower.

In early afternoon trade Citigroup (NYSE: C) was down 11.43 percent while Bank of America (NYSE: BAC) had dropped 16.3 percent.

Story link: LLOY down 31 percent as banks decline globally