FTSE slides 1.1 pct, HSBC bucks trend on results

By Rebekah Curtis

LONDON, March 3 (Reuters) - Britain's leading share index slid 1.1 percent on Monday, dragged by banks and oil stocks as investors feared a U.S. recession was nigh, but global bank HSBC (HSBA.L: Quote, Profile, Research) bucked the trend on its results and a higher dividend.

HSBC led the FTSE 100 .FTSE gainers, rising 3.1 percent after saying its profit rose 10 percent last year, as strong gains in Asia helped it absorb a $17.2 billion hit for bad debts due to U.S. housing market problems. [ID:nL03104887]

Its full-year dividend rose by 11 percent.

The FTSE 100 ended down 65.7 points at 5,818.6, sealing a four-day losing run as European shares also fell sharply.

The UK benchmark index lost nearly 9 percent in the first two months of the year as credit-related writedowns by financial firms and a slew of weak economic data stoked U.S. recession fears.

U.S. stocks, which tumbled on Friday because another round of weak economic data added to those recession worries, trimmed losses on Monday after data showed U.S. factory activity in February contracted slightly less than economists had expected.

"It's just a conveyer belt of negative news at the moment," said Richard Hunter, head of UK equities at brokerage Hargreaves Lansdown.

"Less than convincing economic indicators from both sides of the pond keep coming through."

Futures now indicate a 74 percent chance that the Federal Reserve will cut its benchmark interest rate by a further 75 basis points at the U.S. central bank's next rate-setting meeting on March 18.

Banks were standout losers, with HBOS (HBOS.L: Quote, Profile, Research) and Alliance & Leicester (ALLL.L: Quote, Profile, Research) down 7.5 and 6.7 percent respectively.

Royal Bank of Scotland (RBS.L: Quote, Profile, Research) dropped 4.1 percent and Barclays (BARC.L: Quote, Profile, Research) fell about 3.2 percent.

Among other financials, hedge fund group Man Group (EMG.L: Quote, Profile, Research) lost 4.1 percent, and insurers Aviva (AV.L: Quote, Profile, Research) and Standard Life (SL.L: Quote, Profile, Research) all shed about 4 percent.

"It's just a question of really waiting for some sustained positive news to come through and there's a definite lack of that," Hunter added.

"The noises from the States tend to be pushing more towards recession rather than a slowdown."

ENERGY DROP

Oil and gas producers were the top losing sector, hit by global economic growth concerns and shaving more than 17 points off the index. BP (BP.L: Quote, Profile, Research) shed 1 percent, while Royal Dutch Shell (RDSa.L: Quote, Profile, Research) lost 2.2 percent and gas producer BG Group (BG.L: Quote, Profile, Research) dropped 0.9 percent.

Miners reversed earlier losses to buck the trend as gold set a record high for the fourth straight day and copper prices rose.

Xstrata (XTA.L: Quote, Profile, Research) added 1 percent, having slipped earlier. The miner's 13 percent rise in annual net profit fell slightly short of market forecasts. It gave little detail about talks regarding a possible takeover by Brazil's Vale (VALE5.SA: Quote, Profile, Research).

Pearson (PSON.L: Quote, Profile, Research) dropped 2.6 percent after it trimmed its revenue growth outlook in some areas despite announcing above-forecast profits.

GlaxoSmithKline (GSK.L: Quote, Profile, Research) added 0.4 percent after the drugmaker said its experimental platelet-boosting drug Promacta has been granted priority review by U.S. health regulators, boosting prospects for its early launch. (Additional reporting by Dominic Lau; Editing by David Hulmes)