FTSE hit by banking sector losses

London equities fell on Monday after news of a £200m writedown at Lloyds TSB added to fresh fears about the impact of troubled credit markets on the banking sector. Surprise news of $10bn losses at Swiss bank UBS gave the fears further impetus. The FTSE 100 started the session 0.3 per cent lower at 6,538.1, a loss of 17 points largely accounted for by banks. The mid-cap FTSE 250 fell 0.1 per cent to 10,618.1. Although Lloyds TSB stood by its existing profit guidance for 2007, saying profits on the disposal of non-core businesses balanced credit market losses, news of the £200m writedown added to a sense of gloom in the sector. Shares in the company fell 1 per cent to 483½p and there were wider losses for banks as UBS’s shock move damaged sentiment. Barclays fell 1.4 per cent to 558p, Royal Bank of Scotland fell 1.4 per cent to 476.8 and HSBC lost 1.1 per cent to 849p. Worries that UBS’s move, including an $11.5bn injection of emergency capital from the Singapore government’s investment vehicle and an unnamed middle eastern investor, signalled continuing credit market turbulence into the medium term hit Northern Rock. Shares in the stricken Newcastle-based bank, still dependent on emergency credit from the Bank of England as it considers several rescue bids, fell 6.9 per cent to 103p, the biggest losing margin on the FTSE 100. Overall losses were kept in check by lingering strength in the mining sector on growing hopes for a wave of bid activity in the sector. Kazakhmys, the eastern European copper processor, rose 2.1 per cent to £13.89 and Xstrata rose 1.9 per cent to £37.21.