The FTSE 100 was down 74.3 points at 5097.6 at 11.55am today. The London benchmark continued to sink deeper into bear market territory as banking stocks, rattled by concern about US financials, traded lower. HBOS was the worst off on the FTSE 100, down more than 12 per cent or 32.75p at 227.75p, while Royal Bank of Scotland lost 16.2p to 151.1p following rumours of new write downs.
Barclays was also down and lost 19p at 241.5p following reports in the Chinese press that the China Development Bank will not support the banks cash call.
Citing unnamed officials, Caijing magazine said that the China's State Council had rejected the CDB's plan to pour an additional £136m in the bank. "Chinese officials apparently fear Barclays hasn't yet reached bottom," said the report.
Inter-dealer broker ICAP was up 16.75p at 434.5p after positing an upbeat interim management statement.
Also on the upside, International Power rose by 5p to 424p after JP Morgan initiated coverage on the stock with an "Overweight" rating.
"We believe IPR's diversified fleet and large pipeline of new projects should offer sustainable and defensive earnings growth… marking it a better longer term investment than Drax," the broker said, adding:
"We believe the company's geographic and asset diversification (51 per cent of estimated 2008 profits are from stable, long-term contracts) mitigates its exposure to CO2 risk. Our [540p target price] reflects our preliminary estimate of potential value destruction from new CO2 legislation in the US and Australia."
Wolseley was weaker by more than 10 per cent or 29.75p at 260.5p after posting a gloomy trading update. The company, which has been dogged by concerns about its debt-laden balance sheet, said it would pull its final dividend to save money as market conditions deteriorate further.
Reacting to the news, Merrill Lynch reiterated its "underperform" rating on the stock.
"The outlook statement is very weak and Wolseley expects market conditions to deteriorate into 2009," the broker said, adding:
"The group is incurring another £23m one-off costs in July 2008. Expect downgrades [of around] 5 per cent for 2008 and potentially more for 2009."
Panmure Gordon also expressed caution.
"With continuing concerns about housing across the group's main markets the prospects remain tough. While the group has avoided the need for additional funding the concerns will remain," said the broker.
Also on the downside, Trinity Mirror was off more than 13 per cent or 7.25p to 47.5p.
"Either the market is expecting another step down in [earnings per share] (led by a more cautious national advertising outlook)…or the group's pensions liabilities loom large ahead of the interim update (undoubtedly true), or the impact of dividend cuts have wrong-footed a traditionally income-oriented share register (likely)," said Landsbanki.Reuse content