US manufacturing concerns eclipse HSBC results as Footsie retreats

FTSE: 5,774.43 (–40.76) Mid-250: 11,426.09 (–125.97) Small Cap: 3,263.85 (+1.98)UK STOCKS declined for a second day yesterday, as a report showed that US manufacturing expanded at its slowest pace in two years, overshadow earnings that topped estimates at HSBC.

HSBC, Europe’s biggest bank, climbed the most in four months.

The FTSE 100 lost 40.76, or 0.7 per cent, to 5,774.43 at the close in London.

The gauge has tumbled 5.2 per cent from this year’s high in February amid speculation that Europe’s debt crisis would spread and as concern mounted that US lawmakers would fail to agree on increasing the federal debt limit.

The FTSE All-Share Index also dropped 0.7 per cent.

Yesterday’s manufacturing data “brought the focus back onto a stuttering US recovery”, said Richard Hunter, head of UK equities at Hargreaves Lansdown in London.

“It had looked quite frothy on the back of the weekend’s events but the ISM number turned the market on a sixpence,” he said.

President Barack Obama said on Sunday that Republican and Democrat leaders in both the US House and Senate had reached an agreement to increase the debt ceiling by at least $2.1 trillion and cut government spending by $2.4 trillion or more.

The House planned to vote on the deal yesterday and the Senate may follow.

HSBC rose 2.2 per cent to 607.5p, the biggest gain since April, after reporting first-half earnings of $9.22 billion, beating analyst estimates of $7.82 billion.

Lloyds, the UK’s largest mortgage lender, sank 5 per cent to 41.19p.

BAE Systems, the arms company that last year made 48 per cent of revenue in the US, dropped 3 per cent to 295p.

Laird slumped 15 per cent to 159.8p, its largest drop since November 2008.

Kofax tumbled 8 per cent to 333p.

Intertek, the world’s largest consumer-goods testing company, jumped 3.9 per cent to 1,990p after revenue and earnings grew.

Hammerson, Britain’s third-largest real-estate investment trust, increased 1.4 per cent to 472.5p after the company said first-half profit excluding items was little changed as higher rents reduced the effect of disposals.

African Minerals rallied 4.4 per cent to 647p after completing an investment accord with Shandong Iron and Steel. – (Bloomberg)