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Thursday 22nd of January 2009
January 20, 2009

Royal Bank of Scotland predicts losses; banks decline

by Elaine Frei
Royal Bank of Scotland predicts losses; banks decline

Bank stocks fell Tuesday in most major equities markets on concerns that the recession will get worse 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 RBS (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.

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.

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.

February contracts for West Texas Intermediate were up on the session but March and future contracts were lower in afternoon trade, while gold saw gains but other precious metals and grains prices saw declines.

The pound was weaker on the session.

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