ROYAL Bank of Scotland suffered a pounding yesterday as dealer screens turned red. Some £3 billion was wiped off the value of Scotland's biggest company in a session branded "frightening" by one analyst.
The sell-off came despite analysts at Fo
x-Pitt Kelton highlighting RBS in its European banking sector outlook. FPK also named Deutsche Bank, Anglo Irish Bank and Danske Bank among its top picks.
On RBS, it said: "We believe that the market is overdoing concerns about its capital position, subprime-related exposures and execution risk associated with the integration of ABN Amro."
However, shares in the Scots financial giant slumped 8.2 per cent to close at a fresh low of 342.75p.
Elsewhere in the sector, HBOS tumbled 4 per cent, Barclays slid almost 6 per cent and HSBC gave up nearly 6.4 per cent. Financial shares were badly hit, slicingmore than 63 index points off London's benchmark FTSE 100 index.
Standard Life, which is viewed as more exposed than its peers to commercial property, fell a relatively modest 3.9 per cent to 203.5p, still well below its 2006 flotation price of 230p.
The Footsie dived 5.5 per cent, suffering its largest one-day loss since 11 September, 2001, as the index tracked global markets lower on deepening fears of a possible US recession.
The US stock market was closed for the Martin Luther King one-day holiday, and traders suggested America would be playing catch-up when it reopens today. Jawaid Afsar, a trader at Securequity, said: "It is very, very nerve-racking. People are concerned (about] recession fears, credit fears … write-downs."
Miners, sensitive to global economic growth fears, took a beating as base metal prices slipped. Vedanta lost 8.1 per cent and Antofagasta shed 4.1 per cent.
Xstrata jumped as much as 4.8 per cent early in the session after Brazilian mining giant Vale said it had held takeover talks with its Anglo-Swiss rival, which analysts said could lead to deal worth more than $100 billion (£50bn). But Xstrata ended down 5.5 per cent.
Also falling with the market, Rio Tinto dropped 10 per cent and BHP Billiton fell 10.3 per cent after the latter failed to make a higher bid, which had been rumoured.
With only four shares rising on the FTSE 100, midcap stock and troubled mortgage lender Northern Rock went against the grain by closing 46 per cent firmer at 94p, after earlier rocketing as much as 55 per cent.
A two-week deadline for a private-sector rescue of Northern was set as Chancellor Alistair Darling confirmed plans to convert some £25bn of loans into bonds in a bid to smooth a deal.
Also on a brighter note, housebuilder Taylor Wimpey gained 1.4 per cent as traders cited sector rotation.
Sports Direct dipped 2.3 per cent after a mixed trading update.
The full article contains 505 words and appears in The Scotsman newspaper.
