February 20, 2018 / 10:04 AM / a month ago

RPT-Disappointing HSBC update, weak miners keep FTSE in the red

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* FTSE down 0.1 pct; mid cap index up 0.7 percent

* HSBC falls 4 percent as profit misses expectations

* BHP Billiton lead miners lower after update

* Fidessa soars on possible takeover offer from Temenos

By Danilo Masoni

MILAN, Feb 20 (Reuters) - The UK’s top share index inched lower on Tuesday, weighed down by a disappointing update from banking heavyweight HSBC and declines in big mining stocks on metal price weakness.

The FTSE index was down 0.16 percent at 7,236 points by 0825 GMT, underperforming a broadly positive European market, while the mid-cap index added 0.7 percent, helped by news of a possible bid for software firm Fidessa.

HSBC fell four percent after Europe’s biggest lender by market value reported a jump in annual pre-tax profit that missed expectations and unveiled a plan to raise up to $7 billion over the next four months to bolster its capital base.

Investec analysts confirmed their “neutral” rating on the stock, saying results were “all in all disappointing” and the absence of a share buyback was a negative surprise.

Although results fell short of expectations, ETX Capital analyst Neil Wilson said the performance from HSBC was still strong and showed the bank was beyond recovery phase.

HSBC has undergone a painful restructuring under CEO Stuart Gulliver, who is stepping down on Tuesday after more than seven years at the helm and will be replaced by company veteran John Flint.

HSBC shares have risen about 80 percent from the 7-year lows they hit in April 2016, helped by the restructuring and a beneficial market environment.

Mining stocks were another weak spot, tracking declines in copper prices and a fall of 2.7 percent in BHP Billiton, as a solid-looking update failed to lift its shares which have risen around eight percent over the last year.

BHP reported a 25 percent rise in underlying half-year profit, helped by robust metals prices, and handed an extra $800 million to shareholders as it forecast rising cash flows in the second half.

Traders said its dividend was stronger than expected but the market was expecting more in terms of profit growth.

InterContinental Hotels Group was the biggest faller on the FTSE, down 4.3 percent. The operator of Crowne Plaza and Holiday Inn hotels said it would not pay out any additional capital to investors in 2018 as it announced a better-than-expected profit and a new strategy to speed growth.

Reckitt Benkiser fell for a second day as brokers cut their price targets on the stock, after a disappointing update and a vague outlook on Monday that sent its shares down more than six percent at a one-year low.

Top gainers on the FTSE were shares in Evraz, up four percent after the steel making and mining company inked a $2 billion supply deal with Russia.

Among mid caps, Fidessa soared 22 percent on news that Swiss banking software supplier Temenos is in advanced talks to buy the British trading software provider in a cash deal valuing Fidessa at about 1.41 billion pounds.

Hikma rose 8.4 percent after it named former Teva executive Sigurdur Olafsson as its CEO, as the drugmaker looks to improve its struggling generics business.

A “tough” first half homewares retailer Dunelm down eight percent to lead mid cap losers.

Reporting by Danilo Masoni, Editing by William Maclean

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