LONDON MARKETS: FTSE 100 Struggles, With HSBC, Oil Names Under Pressure

By Barbara Kollmeyer, MarketWatch

Royal Mail hit by broker downgrade; grocers get a lift

MADRID (MarketWatch) -- U.K. stocks were looking down the barrel of a third session of losses on Tuesday, weighed down as heavyweight HSBC Holdings PLC continued to feel the sting of tax-evasion revelations, and as commodity stocks took another fall.

While the rest of Europe got a boost from helpful headlines stemming from Greece, that didn't filter over to London. In Europe and London, markets have recently been suffering amid escalating brinkmanship between Greece and its eurozone partners. The FTSE 100 index pared earlier losses, but was still going nowhere, down 0.1% to 6,828.06.

Greek stocks rebounded on hopes for a deal with international creditors, and markets in Europe extended gains after The Wall Street Journal reported after senior Greek government officials told The Wall Street Journal that Greece will proceed with the privatization of the country's main port. That would mark a U-turn for the country's new government, which has vowed to roll back many austerity measures.

Gainers outpaced decliners in London, but that didn't matter much with the most heavily weighted stocks under pressure. HSBC (HSBC) fell 1.4%, on the heels of a 1.6% drop Monday. That decline came after media reports highlighted fresh details of tax-evasion claims at the bank and allegations of its dealings with dictators and arms dealers.

Read: HSBC should be probed, Democratic senator says

Barclays PLC (BCS) fell 0.7%.

Another major pressure for the index came from oil names as crude prices continued to lose ground, backing away from recent gains. Extending losses into London's afternoon, March crude futures (CLH5) fell $1.54, or 2.8%, to $51.36 a barrel. Shares of BP PLC (BP) slid 2.9%, and Royal Dutch Shell PLC (RDSA) (RDSB) lost 1.7%.

Mining stocks also fell, with Rio Tinto PLC (RIO) tumbling 3.4% and BHP Billiton PLC sliding over 3%. Anglo American PLC dropped 3.5%. Those losses came after China reported another piece of disappointing data, with consumer prices slipping to a five-year low, adding to concerns about deflation in a slowing economy.

A broker downgrade hit shares of Royal Mail Group PLC . The mail carrier was off 4% after J.P. Morgan Cazenove cut it to neutral from overweight, citing a "diminished risk/reward profile" and concerns about a near-term decline of consensus estimates.

On the plus side, retail-related stocks were higher, with retailer Marks & Spencer Group PLC was among the stocks pushing higher, up 4%, and Wm Morrison Supermarkets PLC rose 4% and Tesco PLC jumped 3.5%. Gains for the sector came after market researcher Kantar Worldpanel reported that the grocery sector in the U.K. grew at 1.1%, the fastest rate of growth since June 2014.

Tesco returned to growth for the first time since January 2014, and Morrison's sales fell by 0.4%, which was the best performance from the retailer since December 2013, said Kantar.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires