LONDON MARKETS: FTSE 100 Closes Lower; HSBC, Oil Shares Under Pressure

By Barbara Kollmeyer and Victor Reklaitis, MarketWatch

Royal Mail hit by broker downgrade; grocers get a lift

NEW YORK (MarketWatch) -- U.K. stocks suffered a third session of losses on Tuesday, weighed down as heavyweight HSBC continued to sting in the wake of allegations it advised clients on ways to avoid paying taxes in their home countries, and as commodity stocks took another fall.

The FTSE 100 index pared earlier losses, but still closed down 0.1% at 6,829.12.

While the rest of Europe got a boost from helpful Greek headlines, 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.

HSBC Holdings PLC (HSBC) slumped, building on a drop Monday, 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

Another major pressure for the index came from oil firms as crude prices (CLH5) continued to lose ground, backing away from recent gains. BP PLC (BP) and Royal Dutch Shell PLC (RDSA) (RDSB) both slumped.

Mining stocks also declined, with Rio Tinto PLC (RIO), BHP Billiton PLC and Anglo American PLC all dropping. Those losses came after China reported consumer price inflation fell 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 lost nearly 5% after J.P. Morgan Cazenove cut it to neutral from overweight, citing a "diminished risk/reward profile" and concerns about a near-term decline in consensus estimates.

On the plus side, retail-oriented stocks were higher, with Marks & Spencer Group PLC among advancers. Wm. Morrison Supermarkets PLC and Tesco PLC jumped 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, Kantar said.

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