FTSE 100 ends down as HSBC slumps after taking big charge

By Shristi Achar A and Sruthi Shankar

(Reuters) -Britain's blue-chip share index closed lower on Wednesday as lender HSBC plunged after it reported a shock $3 billion charge on its stake in a Chinese bank, while investors waited with bated breath for Wall Street darling Nvidia's earnings.

HSBC Holdings dropped 8.4%, its biggest one-day drop in nearly four years, despite record profit and chunky shareholder payouts, highlighting the challenge the Asia-focused bank faces as it grapples with China's weaker than expected economic recovery.

"Overall, HSBC had a robust year in 2023 but a sour end to the 12-month period gives a sense of a business which is losing momentum," said Danni Hewson, head of financial analysis at AJ Bell.

"It could really do with a turnaround in fortunes in China to help justify its continued positive stance on the long-term opportunity in the world's second largest economy."

HSBC's slump drove a 5.0% fall in the FTSE 350 banking index. The benchmark marked its worst day since March 2023.

The blue-chip FTSE 100 index slid 0.7%, lagging major European peers ahead of the minutes from the U.S. Federal Reserve's policy meeting as well as keenly watched earnings from U.S. chip designer Nvidia.

Uncertainty around the timing of interest rate cuts as well as nerves around high-growth U.S. technology stocks have kept investors on the edge this week.

Bank of England policymaker Swati Dhingra said there would be real economic costs to delaying interest rate cuts until there was further evidence that underlying inflation pressures were easing.

The mid-cap FTSE 250 index closed up 0.1%.

Close Brothers Group tumbled 8.4% after Fitch downgraded the lender's credit rating, citing expectations of weaker profitability and capitalisation in the medium term.

Cybersecurity firm Darktrace fell 5.0% after U.S. rival Palo Alto Networks cut its annual billings forecast due to softer client spending and steep promotions.

IT services provider Bytes Technology tumbled 10.7% after news that Chief Executive Neil Murphy had resigned.

Glencore dipped 1.1% after the Swiss-based commodity giant posted an earnings slump for last year due to lower commodity prices.

(Reporting by Shristi Achar A and Sruthi Shankar in Bengaluru; Editing by Rashmi Aich and Chris Reese)