Market Report: Standard gains as investors dump HSBC

Standard Chartered drew strength from investors switching out of HSBC last night, bucking the trend in the wider banking sector, which went south again.

Instead of rebounding from the lows of the night before, HSBC lost another 7.0 per cent, or 41.25p, to 547.5p after Morgan Stanley reiterated its view that, contrary to the views of some other analysts, the banking group "will halve the dividend in 2009 and potentially raise $20bn in capital".

"It appears that almost as much has been written by other sell-side firms about our HSBC note [which undermined confidence around the stock in the session before] than we wrote ourselves," the broker said, reiterating its "underweight" rating and 455p target price.

The subsequent share price fall in HSBC was accompanied by gains for Standard Chartered, which was said to be benefiting from investors who – spooked by Morgan Stanley's concerns about the former – were using it to maintain their exposure to the Asian banking market.

As a result of this, Standard climbed 2.8 per cent, or 21p, to 766.5p, over-coming the lack of enthusiasm in the wider sector.

Lloyds TSB, down 11.7 per cent, or 13.7p, at 103.5p, Barclays, down 8.2 per cent, or 11.7p, at 130.4p, and Royal Bank of Scotland, down 4.3 per cent, or 1.8p, at 39.9p, fell amid signs that, after a deceptive lull during the Christmas period, the banking crisis was deepening again.

Punters sought cover as, over on Wall Street, new reports suggested that Bank of America might be in need of a government-sponsored capital injection and Citigroup suffered sharp falls before its quarterly results. Overall, the market continued its losing streak, with the FTSE 100 falling to 4,121.11, down 59.53 points, and the FTSE 250 losing 158.62 points to 6,204.97.

Blue-chip property issues were hit by fears of a possible capital raising by Hammerson, which retreated to 469.5p, down 5.0 per cent or 24.5p. Although similar rumours have floated around the sector for some time, Hammerson, whose portfolio includes London's Brent Cross shopping centre and the Bullring in Birmingham, came under focus after Moody's Investors Service changed the outlook on the group's Baa2 issuer rating to negative from stable.

FirstGroup slipped to 340p, down 5.2 per cent, or 18.75p, as analysts revised their estimates in light of the recent update from the transport group, with both Panmure Gordon and UBS trimming their target prices. On the upside, Old Mutual rebounded from days of underperformance, surging to 56.6p, up 8.0 per cent or 4.2p.

Parts of the mining sector also recovered from recent losses, with Xstrata climbing to 700p, up 1.7 per cent or 12p, on news that it was in discussions that could lead to the reopening of the McArthur River zinc mine in Australia's Northern Territory.

Rio Tinto edged ahead 1.5 per cent, or 21p, at 1,401p after positing a better-than-expected production report.

Elsewhere, Reckitt Benckiser, up 2.0 per cent, or 54p, at 2,706p, traded higher after RBS analysts increased their target price for the stock from 2,990p to 3,100p, saying the company's third-quarter performance suggests it is better placed to deal with the ensuing economic storm than some of its peers.

On the second tier, Venture Production was weak, easing to 504.5p, down 8.8 per cent or 48.5p, as investors took profits from the speculative run on the night before.

The company said that, contrary to one rumour that was doing the rounds, it had not received an app-roach regarding an offer. Other chatter had suggested that Centrica, up 1.3 per cent, or 3.5p, at 267.5p, may have acquired a stake at around 700p per share.

Certain retail issues were out of favour after a round of trading up-dates, from, among others, DSG International and Home Retail Group, re-freshed concerns about the impact of tougher trading conditions.

Debenhams was among the hardest hit, losing 12.5 per cent, or 4.25p, to 29.75p, while DSG eased 2.5 per cent, or 0.5p, at 19.5p, and the FTSE 100-listed Home Retail slipped to 200.5p, down 2.7 per cent or 5.5p.

The housebuilder Barratt Developments, which posted an uninspiring trading update, lost 0.75p to 81p as Dresdner Kleinwort said that housing starts were set to fall below 60,000 in 2009 – "the worst since the 29,000 completions in 1920".

"Some brave souls are predicting a recovery this year. We concur with the late Karen Carpenter - 'we've only just begun'," the broker said.

Among smaller companies, Computacenter jumped to 109.5p, up 8.42 per cent or 8.5p, after Goldman Sachs and Panmure Gordon moved their target prices for the stock to 150p from 121p and 137p from 110p respectively.

"Hats off to Computacenter," Panmure said.

"We lost our nerve in November and trimmed our top-of-the-range estimates back to consensus level, but Computacenter went on to have a strong December and deliver results materially ahead of consensus."