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FTSE steadies near recent lows, HSBC leads banks

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A worker shelters from the rain as he passes the London Stock Exchange in the City of London at lunchtime October 1, 2008.  REUTERS/Toby Melville/File Photo

Britain’s top share index steadied near a recent two-week low on Wednesday, with weaker commodities and property-related stocks offsetting an HSBC-led rally in banking stocks.

The blue-chip FTSE 100 index was down 0.02 percent in morning trading after hitting its lowest since mid-July in the previous session. The index’s 16-percent rally since a post-Brexit slump is losing steam, with the market facing some selling pressure in the past days.

Banks were the top performers, with HSBC helping the UK banking index to gain 2 percent.

HSBC shares rose 3.3 percent after Europe’s biggest bank cheered investors by announcing plans to buy back up to $2.5 billion of its shares, despite reporting a 29 percent slump in its first-half profits.

“This reflects the decision by management to return half of the capital gain generated from the disposal of the group’s Brazilian operations … (but it) has dropped its progressive dividend policy,” Shore Capital analyst Gary Greenwood said.

“So while giving with one hand, (the) management is at the same time taking away with the other.”

Other banks also gained, with both Royal Bank of Scotland and Standard Chartered up around 1 percent.

However, commodities-related stocks lost ground again. The UK mining index fell 0.3 percent, tracking losses in major industrial metals.

Shares in Rio Tinto were down around 1 percent, also after the global miner reported a 47 percent slump in first-half profit to its weakest in 12 years. However, losses were limited as it surprised the market with a higher-than-expected dividend.

Property-related stocks also fell on lingering concerns about the pace of economic growth in Britain after the country voted in late June to leave the European Union.

A closely watched business survey said on Wednesday that Britain’s economy was shrinking at its fastest rate since the 2008-09 financial crisis, making a Bank of England rate cut on Thursday “a foregone conclusion”.

Shares in Persimmon, Taylor Wimpey and Intu Properties fell around 1 percent.

Among other movers, Next rose 3.6 percent after reporting a pick up in sales in its fiscal second quarter from the first.



[Source: Reauters]
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