LONDON (AFP) -
The FTSE 100 index of leading shares closed with heavy losses of more than 5.0 percent Wednesday as investors brushed aside central bank efforts to counter the global financial crisis.

London shares shed 5.18 percent in turbulent trade to finish at 4,366.69 points.

The Royal Bank of Scotland was the most traded stock, seeing 441 million units change hands, followed by Vodafone which saw 318 million shares switch owners.

The falls came despite an unexpected half-point interest rate cut by the Bank of England to 4.5% -- part of an unprecedented synchronised effort by central banks around the world.

The cut is Britain's biggest rate reduction for seven years and it comes amid the growing threat of a recession.

The shares rally that followed the rate cut announcement proved to be shortlived, however.

Earlier in the day, the government announced it would pump 50 billion pounds into the country's main banks as part of an emergency bailout package worth hundreds of billions of dollars.

The government's three-part package also makes available 200 billion pounds in short-term loans and another 250 billion pounds to guarantee loans between banks.

It is hoped the measures will overcome the reluctance of banks to lend to each other, which is at the root of the current crisis.

Eight banks -- HSBC, Barclays, Royal Bank of Scotland (RBS), Lloyds TSB, Standard Chartered, HBOS, Abbey and Nationwide Building Society -- are covered by the package.

The day's biggest loser was retailer Sainsbury, down 47 pence -- or 14.9 percent -- to close at 267.75.

It was followed by miner Vedanta Resources, which lost 141 pence -- or 14 percent -- to close at 864.

On the upside, bank HBOS clawed back some recent losses and topped the leaders board on Wednesday. It gained 23 pence -- or 24.5 percent -- to close at 117.

The day's second-best performer was TUI Travel, which added 8.25 pence -- or 4.05 percent -- to close at 212.

Sterling was down against its major rivals by 16:58 BST. The pound slipped to 1.2652 euro (from 1.2855 euro by the close on Tuesday).

Sterling stood at 1.7307 US dollar by late afternoon, compared to 1.7509 at yesterday's close.

Source

NEW YORK (Reuters) -
Shares in Yahoo Inc (YHOO.O) dropped as much as 9.5 percent in early trading on Wednesday after two groups of Wall Street analysts cut their price targets for the Web company's stock due to a weakening display advertising outlook.

Yahoo's shares fell to a five-year low of $13.20 before recovering some ground to be down 4.5 percent to $13.92 in late morning trade on Nasdaq.

Analysts at American Technology said Yahoo's premium display business faced significant headwinds on a slow-down at key groups of advertisers such as financial companies and automakers, and caution among online advertising customers.

Bank of America analysts also expressed concern about weakening display advertising and lowered their target price for Yahoo shares to $16 from $24, saying they now expect third quarter display advertising to be worse than expected.

"Our channel checks indicate the market for display ad, particularly branded or (cost per thousand)-based ads, continues to worsen beyond our prior expectations and from second quarter levels," they said.

Both sets of analysts said a regulatory delay of a Yahoo deal to outsource its search marketing to Google Inc (GOOG.O). was a slight negative.

American Technology lowered its 'buy' target for Yahoo to $22 from $33 saying there is still hope for Microsoft (MSFT.O) to come back with an offer to buy Yahoo, after its failed bid earlier this year.

"As Yahoo shares decline and Microsoft struggles in its online services business, it is increasingly likely Microsoft will make a new offer," said Rob Sanderson, analyst at American Technology Research.

Shares in Google were up 33 cents to $346.34, while shares in Microsoft were down 1 percent, or 23 cents, to $23.

(Reporting by Yinka Adegoke; Editing by Tim Dobbyn)

Source

NEW YORK (Reuters) -
MetLife Inc (MET.N), the largest U.S. life insurer by assets, said on Wednesday it will cut jobs, one day after it announced plans to raise capital in the middle of a global credit squeeze.

The company's shares plunged more than 20 percent in early trading.

The insurer, which didn't specify the number of jobs to be cut, said the layoffs would conclude this month. MetLife has 49,000 employees around the world, according to Reuters data.

The company said on Tuesday it would sell 75 million common shares to supplement its capital position and to be used for both general corporate purposes and potential strategic initiatives.

The share offering, expected to price on Wednesday, was worth close to $2.76 billion, based on the closing price of the stock on Tuesday on the New York Stock Exchange.

Insurers have been under pressure to keep solid capital positions in order to maintain their ratings as they have been hit by the worst global credit crisis since the Great Depression.

Keeping high ratings is key for insurers because lower ratings can mean higher costs and, in some cases, even a loss of business.

"This is about more than just building a war chest for doing an M&A deal," MetLife Chief Financial Officer Bill Wheeler said in a conference call with analysts.

The company also estimated its excess capital position to be more than $4 billion, and said sources of liquidity include cash and cash equivalents of about $21 billion as of September 30, up from $14 billion as of June 30.

Wheeler said a two-notch ratings downgrade would affect collateral requirements on MetLife's derivative positions by only $200 million.

Earlier this week, Allianz SE (ALVG.DE), Europe's biggest insurer, said it would invest $2.5 billion in U.S. life and property insurer Hartford Financial Services Group Inc (HIG.N).

Last month, American International Group Inc (AIG.N), once the world's largest insurer, received a federal bailout after losses in its financial products unit drove it to the brink of collapse.

MetLife shares were down $7.69, or 20.8 percent, at $29.18 on the New York Stock Exchange.

(Reporting by Elinor Comlay and Juan Lagorio, editing by Steve Orlofsky)

Source