* HSBC plunges on rights issue, dividend cut
* Commodity stocks fall on soft raw material prices
* Insurer Amlin rises after results, outlook improving
By Dominic Lau
LONDON, March 2 (Reuters) - Britain's FTSE 100 <> fell
4.6 percent by midday on Monday, led by financials, after HSBC
<HSBA.L> announced a deep-discount rights issue and after AIG
<AIG.N> reported a $61.7 billion quarterly net loss.
By 1149 GMT, the UK benchmark was down 176.80 points at
3,653.29, a six-year low. The index had fallen 7.7 percent last
month and is down more than 17 percent for the year after
posting its worst annual drop in 2008 since its launch in 1984.
Banks took the most points off the index as HSBC <HSBA.L>,
Europe's biggest bank, tumbled 20 percent to its lowest level
since October 1998.
It booked an 18 percent fall in 2008 adjusted pretax profit
and announced a cut in dividend and a deeply discounted rights
issue to raise about 12.5 billion pounds ($17.75 billion).
Royal Bank of Scotland <RBS.L>, Barclays <BARC.L>, Lloyds
Banking Group <LLOY.L> and Standard Chartered <STAN.L> dropped
between 5.2 percent and 10.6 percent.
"We start the week very badly. It's more of the same bad
news for global equities," said Angus Campbell, head of sales at
Capital Spreads.
"The FTSE 100 is heading below the lows it set back in
October last year, indicating a huge amount of weakness."
"The question here on everyone's mind is, will the FTSE 100
have the momentum? Will it find enough support to be able to
bounce from this current level right now?"
Asian shares fell nearly 4 percent on Monday under pressure
of mounting evidence of a deepening global downturn and fears
about the ballooning costs of saving struggling U.S. and
international financial institutions.
U.S. stocks also slipped on Friday.
Insurer American International Group <AIG.N> reported a
$61.7 billion fourth-quarter loss, the largest quarterly loss in
U.S. corporate history, after a revised rescue plan from the
U.S. government. []
UK insurers were mostly down, with Prudential <PRU.L>, Old
Mutual <OML.L>, Standard Life <SL.L> and Aviva <AV.L> down 5.3
percent to 7.2 percent.
Amlin <AML.L> advanced 2.9 percent after the insurer posted
a big fall in its annual profit, affected by hurricanes and
lower investment returns, but lifted its dividend and said the
outlook for underwriting was improving.
"The capital raising from HSBC is obviously a major market
focus," said Darren Winder, equity strategist at Cazenove.
"But more generally it is the weakness of the U.S. market
from Friday that is weighing heavily on the markets."
"The big picture is still one of a profit picture which is
under strong downward pressure and people are finding it very
difficult to get comfortable with valuations against that sort
of backdrop."
HSBC's huge rights issue and further government funding for
AIG pushed sterling lower against the dollar.
SLIPPERY OILS, DULL METALS
Commodity stocks were another standout faller on the UK
index as prices in oil <CLc1> and base metal eased.
Oil majors BP <BP.L> and Royal Dutch Shell <RDSa.L> sagged 4
percent and 3.8 percent, respectively, while BG Group <BG.L>,
Cairn Energy <CNE.L> and Tullow Oil <TLW.L> slipped between 2
percent and 3.7 percent.
Among the miners, BHP Billiton <BLT.L>, Rio Tinto <RIO.L>,
Anglo American <AAL.L>, Xstrata <XTA.L>, Kazakhmys <KAZ.L> and
Vedanta Resources <VED.L> fell between 3.8 percent to 7.1
percent.
The Australian government said it would take its time before
deciding on China's planned $19.5 billion investment in Rio
Tinto.
Mid-cap Segro <SGRO.L> plunged 22.6 percent on fears it
would soon launch a deeply discounted rights issue. Within the
sector, British Land <BLND.L> sank 14 percent, while Land
Securities <LAND.L> dropped 9.1 percent.
(Additional reporting by Jon Hopkins; Editing by Andrew
Macdonald)
