By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. stocks clung to the flatline
Thursday, as property developers jumped but Barclays PLC hit a
19-month low amid U.S. legal problems.
U.K.'s FTSE 100 index was down 1 point at 6,732.25.
Barclays shares (BCS) put in the worst performance on the index,
falling 5.1% to GBP2.18 ($3.71) to trade at levels not seen since
November 2012, according to FactSet data. The decline was set off
after New York Attorney General Eric Schneiderman on Wednesday said
he's filing a civil lawsuit over how the bank operates its dark
pool. Dark pools, private trading platforms that allow for block
trades, are designed to allow firms to make anonymous trades
without disclosing their hands.
The lawsuit alleges Barclays dramatically increased the market
share of its dark pool through a series of false statements to
clients and investors about how, and for whose benefit, Barclays
operates its dark pool.
Litigation costs "are a challenge to Barclays executing its
strategic plan, as they put pressure on the capital base, which
based on our estimates pro-forma for litigation, is the weakest of
the peer group," said Credit Suisse in a note Thursday.
Credit Suisse estimates banking-sector litigation costs of $104
billion, up from its $58 billion estimate the year before, "and we
see upward risk to this estimate. We have seen banks with legacy
litigation risk starting to materially underperform those less
exposed."
Elsewhere in the banking sector, Standard Chartered PLC shares
fell 4% after the bank, which focuses on emerging markets, warned
its first half operating profit will be 20% lower than a year
earlier. Trading conditions mainly in financial markets have been
"difficult," the bank said in a statement.
But housing stocks ranked among the session's best performers
after the Bank of England outlined measures aimed at cooling the
U.K.'s housing boom. Housing stocks this week had come under
pressure ahead of the bank's announcement, but on Thursday,
Persimmon PLC was pushed up 5.8% and Barratt Developments PLC
climbed 5.6%.
The central bank's Financial Policy Committee proposed
tightening rules for mortgage lending to keep debt levels for home
buyers in check amid fears of a housing bubble. As well, loans of
4.5 times a borrower's income must not exceed more than 15% of new
residential mortgages made by lenders. House prices in the U.K.
have risen nearly 10% in the year to April, according to the Office
for National Statistics.
Among other property developers, British Land Co. rose 1.1%. Off
the benchmark, Taylor Wimpey PLC gained 5.5% and Berkeley Group
Holdings PLC
The best price performance came from a 6.2% rise in London Stock
Exchange Group shares after the exchange operator said it's buying
Frank Russell Co., a U.S.-based stock-index and asset-management
business, for $2.7 billion. The stock-index unit of Russell is
behind the Russell 2000 (RUT) gauge of small-cap stocks.
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