By Sarah Turner
LONDON (Dow Jones)--Banks led losses for British stocks on
Thursday, paring sharp gains made in the previous session, with
Standard Chartered shares under pressure after updating
investors.
Standard Chartered shares fell 2.3% after it said that it
believes it's too early to forecast a sustained recovery and
remains cautious on the outlook.
The lender - which concentrates on lending to customers in Asia
-- said that that there has been a moderate deterioration in
consumer banking loan impairments, primarily due to worsening
conditions in India, Pakistan and the United Arab Emirates.
Other banks were also under pressure, with another Asia-focused
bank HSBC Holdings (HBC) down 2.4% and Barclays (BCS) down
0.4%.
Royal Bank of Scotland (RBS), however, rose 3.4% after Cazenove
upgraded it to outperform from underperform, saying that it expects
the company's shares to react positively to news on restructuring,
the U.K. government's asset-protection program, as well as
disposals.
"The absolute share-price performance will in large part be
driven by the level of economic activity, but relative to its peers
we expect RBS to outperform given its lower risk strategy," said
the broker. "With the share price now trading around tangible book
value, we believe the valuation reflects investor confidence in the
capital position."
Overall, the U.K. FTSE 100 index gave up 0.6% to close at
4,252.57. Other European shares were also weak.
The FTSE 100 index ended 1.2% higher on Wednesday, helped by
gains for banks and metal extractors ahead of a decision on
interest rates from the U.S. Federal Reserve.
The Fed kept rates on hold, as widely expected.
Metals stocks were paring also some gains on Thursday, with BHP
Billiton (BHP) and Lonmin shares down 2.2%.
In the oil sector, BP (BP) shares edged down 0.2% after it
became the second major oil company to turn to a telecom-industry
executive to be chairman, naming Ericsson CEO Carl-Henric Svanberg
to the position.
BP said that Svanberg will move to London and succeed Peter
Sutherland, who will retire at year's end.
Merrill Lynch lifted insurer Standard Life , up 2.4%, to buy
from neutral, saying the shares have underperformed the market by
nearly 30% since the March rally, making for an "excellent" entry
point for investors.
The investment bank said Standard Life is less exposed to market
conditions and risks, plus it has a balance sheet that isn't overly
encumbered with intangibles. It also has one of the highest
statutory surplus levels and the lowest level of asset gearing to
this surplus, the investment bank said.
Shares of electronic goods retailer DSG International pulled
back from early gains to trade flat in the afternoon.
Its net loss for the year ending May 2 narrowed to 219.4 million
pounds ($360.1 million) from 260.8 million pounds, while revenue
slipped 1% to 8.36 billion pounds.
DSG said it expects the weak conditions to continue through the
coming year in many of its markets. It will focus on managing
costs, margins, stock and cash flow, adding that it remains
confident of its medium-term target of achieving a 3% to 4% return
on sales.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274