By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Banks led U.K. stocks lower on Tuesday,
with Lloyds Banking Group PLC posting the biggest loss in the
sector after the government placed a stake in the bank.
The FTSE 100 index lost 0.5% to 6,588.06, after closing at the
highest level since early August on Monday.
Shares of Lloyds Banking Group (LYG) dropped 3.6% to 75 pence
after the U.K. government placed the planned 6% stake in the bank
at 75 pence per share, raising 3.21 billion pounds ($5.12 billion).
The government bailed out Lloyds in 2009, taking a 39% stake in the
U.K.'s biggest retail bank.
"The move to offload the 6% stake is very welcome, particularly
for the U.K. banking sector which continues to suffer from a
mixture of scandals, litigation and poor reputation amongst the
U.K. public. Lloyds has turned out to be a model student versus RBS
which has been unable to repair its finances as quickly and as
efficiently as Lloyds," said Joe Rundle, head of trading at ETX
Capital, in a note.
Other banks were also lower, with shares of Barclays PLC (BCS)
2.8% lower, HSBC Holdings PLC (HBC) down 1% and Royal Bank of
Scotland Group PLC (RBS) down 0.7%.
Among other notable decliners in London, shares of
temporary-power provider Aggreko PLC fell 4.2% after Credit Suisse
cut the firm to underperform from neutral. The analysts said they
expect underlying growth in the power projects division to turn
negative in the second half of the year and into 2014, partly due
to falling demand.
Oil firms were also lower, as oil prices dropped on further
signs of easing tensions in the Middle East. Shares of BG Group PLC
dropped 0.9%, BP PLC (BP) fell 0.5% and Royal Dutch Shell PLC
(RDSB) lost 0.3%.
Elsewhere in the commodity space, Glencore Xstrata PLC (GLCNF)
fell 2.1% after UBS cut the commodity titan to neutral from
buy.
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