[R2:00PM New York, 7:00PM London – Lowered earnings outlook for financial brokerage companies, lower than expected earnings from HSBC, and weak sentiment in European trading, dragged London market lower./R]

Stocks in London ended lower led by financial stocks as deepening losses caused by the global credit markets gnawed at corporate profits. However, rising commodity prices and a strong earnings growth from Xstrata helped trim losses.

Market Sentiment

In London trading FTSE 100 declined 1.12% or 65.7 to 5,818.60.

Of the 102 FTSE 100 stocks 16 gained, 84 dropped and 2 were unchanged. HSBC led advancers in the FTSE 100 stocks with a rise of 3.13% after reporting that profit attributable to shareholders of the parent company grew 21% to $19 billion from $15 billion a year ago.

HSBC gains on emerging markets

HSBC reported today that the company’s total operating income rose by 25% to $87 billion from $70 billion buoyed by strong growth in the Asia-Pacific region where profits advanced 24.8% to $6 billion from $3.5 billion a year earlier.

Profit before tax in Europe also increased 35.5% to $8.5 billion from $ 6.9 billion. Also profits in Hong Kong grew 30.3% to $7.3 billion.

On the overall, gains in the developing markets helped to offset loan impairment charges and risk provisions that increased by 79% to $11.7 billion.

The lender strategically positioned itself through acquiring a 51% stake in Korea Exchange Bank and increased its interest in Techcombank to 15% in Vietnam.

Xstrata still in negotiations with CVRD

Xstrata reported today in a statement accompanying its 2007 annual results that the company is still in talks with Vale, the Brazilian iron ore mining company, which has made $85 billion for Xstrata.

The company however said in the year ended December 31st that profit increased 13% to $5.54 billion from $4.89 billion as outputs of coal increased from Southern Peru by 31% to 1.6 billion tons and nickel grow 9.8%. Sales jumped 12% to $28.5 billion.

Gainers & Losers

HSBC Holdings Plc led advancers in the FTSE 100 stocks with a rise of 3.13% followed by gains in Compass Group of 1.76%, in Sage Group of 1.39%, in Lonmin Plc of 1.36%, and in Rolls-Royce Group of 1.32%.

Other commodity stocks also rose as well as Xstrata’s profits advanced 13%. Antofagasta Plc increased 0.74% and Kazakhmys grew 1.16%.

HBOS Plc led decliners in the FTSE 100 stocks with a drop of 7.54% followed by losses in Alliance & Leicester in 6.74%, in Friends Pro Plc of 4.87%, in Aviva Plc 4.42%, and in Cairn Energy of 4.38%.

Aviva Plc declined after the Sunday Telegraph said the company might sell of its Indian back office business.

Other financial stocks fell as well. Royal Bank of Scotland fell 4.1%, Barclays shed 3.20% and Old Mutual declined Plc of 2.95%.

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