(Agencies)
Updated: 2007-11-27 07:57

Housing Trouble

In the latest sign of trouble for the housing industry, home financing providers Freddie Mac and Fannie Mae fell sharply after UBS downgraded the mortgage finance companies, citing increased mortgage losses and erosion of other home-loan investments.

Home builder shares also tumbled, including KB Home, whose stock ended down 9.4 percent at $19.65 on the New York Stock Exchange. The Dow Jones home construction index slid 6.6 percent.

The sell-off in shares of financial services companies coincided with a report from Goldman Sachs saying that HSBC, Europe's biggest bank, would likely need a further $12 billion in provisions for its US subprime mortgages and home equity loans.

HSBC on Monday provided up to $35 billion to support its two structured investment vehicles, or SIVs. SIVs have been battered by the recent subprime-related credit turmoil.

Citigroup shares closed down nearly 6 percent at $29.80 on the New York Stock Exchange where shares of Bank of America Corp, the No. 2 US bank, ended down 2.94 percent at $41.88.

Among retailers, shares of Home Depot Inc, the No. 1 US home improvement retailer, slid more than 5 percent to $27.49 on the NYSE, while those of department store operator Macy's Inc plunged 6.1 percent to $28.21.

Exxon Mobil shares ended down 2.96 percent at $85.68 after US crude for January delivery fell 48 cents to settle at $97.70 per barrel on the New York Mercantile Exchange.

Trading was light on the NYSE, with about 1.50 billion shares changing hands, below last year's estimated daily average of 1.84 billion. On Nasdaq, about 2.02 billion shares were traded, matching last year's daily average.

Declining stocks outpaced advancers by a ratio of about 8 to 3 on both the NYSE and the Nasdaq.

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