HSBC shares dip despite profits

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The FTSE 100 Index opened 29 points lower at 5972

HSBC shares are under pressure despite the banking giant’s return to the kind of profitability last seen before the financial crisis.

The group’s surplus of 19 billion US dollars (£11.8 billion) during 2010 was more than double a year earlier but came in slightly short of City expectations and meant shares slipped 3% or 21.4p to 689.7p.

There was also disappointment for Primark owner Associated British Foods, while the FTSE 100 Index surrendered some of the gains seen on Friday to stand 29 points lower at 5972.2.

AB Foods slipped 39.75p to 987.25p as it revealed a deterioration in sales growth at Primark and said the discount fashion chain had seen a “noticeable” slowdown in UK consumer demand.

While half-year figures will be in line with market expectations, Shore Capital said there was more evidence that the company’s various divisions were experiencing either lower sales growth or margin pressure.

Next was also impacted by the Primark update as its shares fell 23p to 2001p.

Penguin, Financial Times and textbook publisher Pearson moved in the opposite direction, lifting 11p to 1052p, after reporting a 15% rise in full-year profits to £857 million and a 9% increase in its dividend.

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