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October 14, 2010    

Standard Chartered gains as other London banks decline

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by Elaine Frei
Standard Chartered gains as other London banks decline

European equities markets were mostly lower Thursday on concerns that banks are going to have to raise more cash in order to comply with new rules on required reserves and after the US Labor Department reported that more new jobless claims were filed last week than had been expected as new filings were up by 13,000 to 462,000.

The FTSE 100 dropped 0.35 percent to 5,727.21 in London, while the FTSE 250 was down 0.18 percent to 10,882.66.

Most London banks were lower as investors worried that share value could be diluted if the banks have to issue more shares to raise capital to add to reserves, although Standard Chartered (LSE: STAN) added 0.64 percent even though it announced yesterday that it would launch a rights issue to raise more cash.

Royal Bank of Scotland (LSE: RBS) was the biggest decliner in the sector, dropping 4.69 percent while Barclays Bank (LSE: BARC) was down 4.13 percent and Lloyds Banking Group (LSE: LLOY) was 2.93 percent lower.

The mining sector was mixed, with three miners among the top five gainers on the 100, but African Barrick Gold (LSE: ABG) dropped 9.54 percent to lead decliners on that index after it suspended nearly half of its employees at a mine in Tanzania after fuel thefts that will cut mining output there by 30,000 ounces this year.

The suspensions came after it was discovered that the thefts were carried out by gangs that had infiltrated the operations at the mine.

Xstrata (LSE: XTA) led gains on the 100, adding 3.23 percent while Rio Tinto (LSE: RIO) gained 2.39 percent and Fresnillo was up 2.26 percent, while over on the 250 Hochschild Mining (LSE: HOC) was 3.94 percent higher to lead gains in the sector.

Food wholesaler Booker Group (LSE: BOK) was the biggest gainer in London as it added 8.46 percent on the 250, while Devro (LSE: DVO), which makes collagen products for the food, health care and cosmetics industries, dropped 4.89 percent for the biggest decline on the 250.

Book retailer WH Smith (LSE: SMWH) added 5.49 percent after it announced a share buyback.

The FTSE Eurofirst 300 was down 0.15 percent to 1,084.93 while the IBEX also fell 0.15 percent, to 10,849.7, and the CAC-40 dropped 0.24 percent to 3,819.17, but the Dax managed to add 0.32 percent to 6,455.27.

Most markets in the Asia-Pacific region were higher on positive sentiment generated by optimistic data from the region and good earnings reports from US firms.

The Nikkei 225 was up 1.91 percent to 9,583.51 in Tokyo, while the Topix index added 1.74 percent to 836.95 but the Mothers market dropped 0.47 percent to 353.17.

The real estate sector saw gains after the Real Estate Economic Research Institute said that there were 3.9 percent more new condominiums on the market in September than during the same month last year, with Mitsubishi Estate (TYO: 8802) up 4.3 percent while Sumitomo Realty & Development (TYO: 8830) added 4.4 percent and Mitsui Fudosan (TYO: 8801) gained 4.5 percent.

Yahoo Japan (TYO: 4689) was 6.4 percent higher on media reports that it expects to receive takeover bids and is working with Goldman Sachs to fend off any approaches.

Exporters advanced even though the yen strengthened versus the US dollar, with carmakers Toyota Motor (TYO: 7203) and Honda Motor (TYO: 7267) up 3 percent and 2.2 percent respectively, while consumer electronics giant Sony (TYO: 6758) added 2 percent and camera and copier maker Canon (TYO: 7751) gained 1.7 percent.

Elsewhere in the region, The Shanghai Composite was up 0.64 percent to 2,879.64 while South Korea’s Kospi added 1.26 percent to 1,899.76, the Taiex gained 1.34 percent to 8,215.45 in Taiwan, and the Hang Seng was 1.68 percent higher to 23,852.17 in Hong Kong.

Australia’s markets also advanced, with the Sydney Ordinaries adding 1.59 percent to 4,765.9 while the S&P/ASX200 gained 1.71 percent to 4,699.1.

On the other hand, the Straits Times Index was down 0.22 percent to 3,195.02 in Singapore, while India’s Sensex dropped 0.92 percent to 20,497.64.

New York markets declined on last week’s unemployment claim numbers, as well as on investor worries about what a probe into the mortgage industry over foreclosures might reveal.

The Dow Jones Industrial Average was 0.28 percent lower to 11,065.02 in midday trade, while the S&P 500 was down 0.55 percent to 1,171.61 and the Nasdaq Composite had dropped 0.36 percent to 2,432.45.

Crude oil prices were slightly lower at midday, but West Texas Intermediate still traded near $83 per barrel, while copper prices were lower but precious metals had advanced, including another $4.40 gain for gold, up to $1,374.90 per troy ounce.

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