London equities fell on Thursday, on renewed worries about potential write-downs in the financial sector.
The FTSE 100 fell 2.2 per cent to 5,706.4 a loss of 130 points. Mid-cap stocks also fell, with the FTSE 250 losing 210 points to 9,698.0, a loss of 2.1 per cent.
The Dow Jones Industrial Average fell 0.9 per cent to 12,310.9 a loss of 131 points at the start of trade in New York after a bigger-than-expected rise in jobless claims before more closely-watched non-farm payroll data on Friday. The broader based S&P 500 was also 0.9 per cent weaker at 1,343.5, a loss of 12 points.
News of the $2.3bn fourth quarter loss at bond insurer MBIA added the and tied in to the jitters in Europe.
Back in London, Standard Chartered lost 3.4 per cent to £15.96 after it announced plans to bail out Whistlejacket, one of its structured investment vehicles exposed to the subprime lending crisis. The bank, which focuses on emerging markets, said Whistlejacket's core assets fell from $18.2bn at the end of August to $7.2bn by January 24.
Wider financial stocks suffered on fresh worries about the dangers posed to the sector by monoline insurers, who guarantee punctual interest and principal payments on bonds.
The risk of widespread failure among monolines, which could lose their triple-A credit ratings due to their own exposure to the subprime crisis, stoked worries about banks which use them to protect their assets.
London's high street lenders were not immune to the worldwide concern. Royal Bank of Scotland fell 4.6 per cent to 367½p, Barclays (NYSE:BCS) lost 5.1 per cent to 453p, HBOS fell 4.4 per cent to 672p and HSBC lost 2.7 per cent to 734p.
Friends Provident announced plans to sell its F&C and Lombard fund management units as part of the strategic review undertaken after its failed plans to merge with Resolution. It also said 2007 profits would be 41 per cent below the year before. The shares fell 7.1 per cent to 144.2p, the biggest losers on the FTSE 100.
Other insurers were also hit by worries about rising premiums and added risk from monolines. Prudential fell 3.2 per cent to 620p, Aviva was 3.1 per cent weaker at 600p and Legal & General lost2.8 per cent to 127p.
Elsewhere, Royal Dutch Shell reported record annual earnings of $27.6bn, up from $25.4bn a year earlier, boosted by strong crude prices throughout the year.
Although its profits became the biggest ever reported by a British company, the Anglo-Dutch refiner did not update investors on the rate at which it was replacing drilled oil with proven reserves of new supplies, an important performance indicator in the sector. Its shares fell 1.7 per cent to £17.14.
Elsewhere in the sector Tullow Oil was up 1.5 per cent at 578½p after it agreed to sell its 11 per cent interest in a Congo oil field to Korea National Oil for $435m.
Cairn Energy lost 0.2 per cent to £25.05, after it reported gross operated production for 2007 of 87,031 barrels of oil equivalent per day, down from 105,028 in 2006.
Vodafone beat forecasts with news of a 15.8 per cent rise in third quarter revenue of £9.2bn, but it failed to lift full-year profit guidance. Shares in the mobile phone service provider, one of the most actively traded stocks on the FTSE 100, fell 0.5 per cent to 176p
Vedanta, which operates principally in India, said a stronger rupee led to a 7.3 per cent fall in third-quarter profit. Its stock fell 2.9 per cent to £17.80.
There was little reaction in London to news of the Federal Reserve's move to cut its Fed Funds rate by 50 basis points to 3 per cent. Traders had priced the move into the market over previous sessions.
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