Monday July 21, 11:50 AM
European markets dip as HBOS rights issue disappoints
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LONDON (AFP) - Europe's main stock markets fell on Monday when the financial services sector was dampened by news of a disappointing rights issue from British home loan provider HBOS (LSE: HBOS.L - news) , dealers said.
By late morning, London's FTSE 100 index of top companies had given up 0.36 percent to stand at 5,357.20 points.
Frankfurt's DAX 30 (Xetra: news) slid 0.19 percent to 6,370.26 points near the half-way mark and the Paris CAC 40 lost 0.18 percent to 4,291.56.
The Euro Stoxx 50 index of leading eurozone shares declined 0.38 percent to 3,309.06 points.
The European single currency stood at 1.5883 dollars.
On Wall Street last Friday, US shares had closed mixed in volatile trading after Citigroup (ASFZ.PK - news) reported better-than-expected losses and Microsoft (NASDAQ: MSFT - news) and Google (NASDAQ: GOOG - news) issued dim outlooks that roiled tech stocks.
Tokyo financial markets were closed on Monday for a public holiday.
In London on Monday, British bank HBOS said it had failed to raise almost eight billion dollars from shareholders to bolster finances hit by the global credit crisis, leaving underwriting banks to pick up most of a rights issue.
The country's biggest mortgage lender, seeking to boost its capital after heavy credit squeeze writedowns, said investors had agreed to provide just 8.29 percent of its 4.0-billion-pound (5.0-billion-euro) cash call.
A bank spokesman blamed the poor take-up on a "fierce financial storm" that has battered the financial sector amid fallout from the collapsed US subprime housing market and the related credit crunch.
HBOS added in a statement that underwriting banks Dresdner and Morgan Stanley (SPU - news) would try to sell the remaining shares. The pair will be obliged to purchase the stock on Tuesday if they were unable to find buyers.
However, HBOS shares dived 2.84 percent to 274 pence in late morning deals, sinking once more underneath the issue price of 275 pence.
In the same sector, shares in Barclays (LSE: BARC.L - news) slid 1.33 percent to 316 pence, but Royal Bank of Scotland (LSE: 91ID.L - news) rallied 1.59 percent to 200.74 pence.
Last month, RBS (LSE: RBS.L - news) had received a huge take-up rate of 95 percent from shareholders in its own record-breaking 12-billion-pound rights issue.
Elsewhere in Europe on Monday, French banks BNP Paribas (Paris: FR0000131104 - news) and Societe Generale (Paris: FR0000130809 - news) saw their share prices fall by 1.10 percent and 0.81 percent, to stand at 61.81 euros and 56.29 euros respectively.
Across the Atlantic on Friday, Wall Street was mixed as investors tracked the latest news from the company results season.
The Dow Jones Industrial Average gained 0.44 percent to close at 11,496.57 points. The tech-heavy Nasdaq composite (NASDAQ: news) dropped 1.28 percent to finish at 2,282.78 points, while the broad-market Standard (SNDH.PK - news) and Poor's 500 was up 0.03 percent at 1,260.68.
In Asia on Monday, Hong Kong's key Hang Seng Index surged by 3.01 percent to close at 22,532.9 points, as investors snapped up local property developers on speculation that the city may face a shortage of flats, dealers said.
And in Shanghai, Chinese share prices rallied 2.99 percent as financial stocks surged amid expectations of strong half-year earnings.
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