FTSE skids nearly 5% on oil shares

LONDON: Britain's FTSE 100 skid 4.8% lower on Wednesday, with banks and oil shares tumbling and as Wall Street took a whipping from a grim outlook for the global autos industry.

The FTSE 100 closed down 202.87 points at 4,005.68. The index has lost 38 percent so far this year as a global banking crisis has driven the global economy onto the brink of recession.

Shares in energy companies were the day's standout losers, with BP, Royal Dutch Shell and BG Group dropping between 3.7 and 5.9 percent as crude oil fell about 1 percent.

A battered banks sector was further depressed by J.P Morgan Securities slashing its earnings estimates on the UK banking sector and taking the axe to share-price targets.

HSBC dropped 9.1 percent, with WestLB also cutting its rating to "sell" from "reduce", while Barclays lost 13.3 percent.

HBOS shares were up 2.1 percent, however, on hopes that Wednesday's meeting of Lloyds TSB shareholders will secure government funding and OK the takeover of HBOS.

Lloyds TSB shares fell 9.7 percent.

On the economic front, minutes from the Bank of England's November rate-setting meeting raised expectations of further big cuts, showing the bank considered slashing borrowing costs by more than 200 basis points this month, before settling for a 150-basis points cut.

"Everybody's focusing on the fact that the rate cut potentially could have been an awful lot bigger than it subsequently turned to out to be," said Peter Dixon, an economist at Commerzbank.

"It gives the sense that the bank is not quite on top of things," he added. "You'd have thought there'd have been a lot more progressive moves towards preparing the markets and indeed preparing the committee itself for this sudden change."

Autos rattle Wall St

U.S. stocks had fallen between about 2 and 3 percent at the time the London market closed, as fears grew about the diminishing prospects for a U.S. auto industry rescue.

U.S. consumer prices plummeted at the sharpest rate on record in October as a slowing economy caused energy costs to drop for a third straight month, according to a Labor Department report on Wednesday.

Insurer Legal & General fell 9.5 percent as Deutsche Bank cut its target price.

Miners also weighed down on the FTSE 100, as copper dropped 3 percent and aluminium hit a three-year low on a poor global auto industry outlook.

Kazakhmys, Vedanta and Xstrata slid between 11.8 and 17.9 percent.

But Experian jumped 7.4 after the credit information provider posted an 8 percent rise in first-half earnings and said revenue growth rates should hold up in the third quarter.

Ex-dividend factors took 12.52 points off the blue-chip index on Wednesday.

Meanwhile, British factory orders fell sharply in November and manufacturers gave their gloomiest projections about future output in nearly 30 years, according to a monthly survey from the Confederation of British Industry.