Bank stocks bring FTSE down as HSBC shares fall 20%

20 March 2009 / by Rebecca Sargent
Shares in UK banks have brought the FTSE lower again this morning, following the highs of yesterday as HSBC shares fall 20 per cent.

Shares in both banks and insurance companies sent the FTSE soaring yesterday following positive results from Prudential, and the banks' shares rallied amid reported hopes that quantitative easing will boost lending.

The boost in bank shares yesterday was led by Barclays, which, according to reports, jumped by 16.5p. However, shares in the bank have fallen back by around five per cent this morning.

But it is shares in HSBC that have led the FTSE's fall so far today, having lost around twenty per cent of their value this morning, following yesterday's announcement that the bank's shareholders have given its £12.5billion rights issue the go ahead. HSBC shares currently stand at 362p, down from yesterday's close of 451p.

According to analysts, the fall in shares is also a result of investors' closing their positions and taking their profits following yesterday's rises.

According to Joshua Raymond, market strategist at City Index, the UK FTSE has risen 13 per cent over nine trading days to yesterday's highs:

"The banks have led the FTSE lower in early trading. The sector as a whole has risen over 50 per cent from March 9 to the highs of yesterday, and in fact the market has found most of its strength in financials lately. This also means however, it is more sensitive to profit taking."

So far today the FTSE has fallen by around 0.5 per cent.

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