* Commodities hit by U.S. auto bailout collapse
* Banks tumble; HBOS takes 8 bln stg hit
* JPMorgan CEO warns of "terrible" Q4; BoA cuts jobs
(For full coverage of the financial crisis, click on
[])
By Simon Falush
LONDON, Dec 12 (Reuters) - Bank shares tumbled by midday on
Friday, pulling down Britain's top share index down 3.9 percent
after HBOS <HBOS.L> reported a sharp rise in bad debts, while
commodity stocks slid following the collapse of a deal to bail
out automakers.
By 1212 GMT the FTSE 100 <> was down 161.57 points at
4,227.12. The UK benchmark is down more than 34 percent for the
year on fears of a long and painful global recession.
Embattled banks were on the ropes again after HBOS said bad
debts and other charges so far this year jumped 66 percent in
the last two months alone, to 8 billion pounds ($11.9 billion).
[]
HBOS slumped by 21 percent, Lloyds TSB <LLOY.L> tumbled 18.7
percent, Royal Bank of Scotland <RBS.L> slid 17 percent, while
Barclays <BARC.L>, HSBC <HSBA.L> and Standard Chartered <STAN.L>
fell between 4.2 and 12.7 percent.
Analysts said the poor news coming out on both sides of the
Atlantic is cancelling out the beneficial effects from measures
to boost the economy.
"No matter how low interest rates go, or how much stimulus
the government delivers, it's clear that parts of the economy
are suffering badly, and that is going to impact on sentiment
and cause investors to sell shares," said Henk Potts, equities
strategist at Barclays Stockbrokers.
The Bank of England slashed interest rates by 100 basis
points to 2 percent, their lowest since 1951, just a month after
a 150 basis point cut, while the government announced tax cuts
in a pre-budget report last month.
"TERRIBLE" TIMES
Emphasising the torrid time banks are enduring, the chief
executive of JPMorgan Chase & Co <JPM.N> said the U.S. bank has
had a "terrible" November and December.
Adding to the gloom, Bank of America <BAC.N> said it plans
to eliminate 30,000 to 35,000 jobs over three years, as the
economic slowdown dampens its business activity. []
Senate negotiators failed late on Thursday to reach a
compromise deal to bail out the embattled U.S. automakers,
effectively killing any chance of congressional action this
year. []
The news sent prices of crude oil <CLc1> and metals lower,
and weighed heavily on commodity stocks. BP <BP.L>, Royal Dutch
Shell <RDSa.L>, BG Group <BG.L> and Tullow Oil <TLW.L> shed
between 2.1 and 4 percent.
Miners BHP Billiton <BLT.L>, Rio Tinto <RIO.L>, Xstrata
<XTA.L>, Vedanta Resources <VED.L>, Anglo American <AAL.L>,
Antofagasta <ANTO.L> and Kazakhmys <KAZ.L> fell between 3.9 and
5.9 percent.
"The U.S. economy like the other developed economies is
going to contract in 2009 and that makes the first half of 2009
quite problematic for equity markets," said Darren Winder,
equity strategist at Cazenove.
"But in the second half of the year we should see signs of
more progress. Sentiment is very negative at the moment and
there is nothing in the macro level going to shift those
sentiments any time soon."
With the grim economic news and fears of a weak Christmas
sales, retailers also came under severe pressure. Marks &
Spencer <MKS.L> dropped 3.1 percent, fashion retailer Next
<NXT.L> lost 2.3 percent and home improvement retailer
Kingfisher <KGF.L> fell 1.6 percent.
Supermarkets Sainsbury <SBRY.L> and Morrison <MRW.L> fell
2.3 and 1.3 percent respectively.
Drugmaker Shire <SHP.L> was one of a handful stocks in
positive territory, gaining 2.3 percent as investors sought
safety in stocks perceived as defensive.
(Additional reporting by Dominic Lau; Editing by Hans Peters)
