LONDON

THE FTSE-100 index edged down yesterday as below- forecast results from mortgage lender HBOS weighed on banks, although miners boosted by merger and acquisition talk offered some support.

The Footsie closed down 10.9 points, or 0.2% at 6076.5, paring earlier losses after the US regulator for Fannie Mae and Freddie Mac said it would lift an investment cap, freeing up billions of dollars for the mortgage finance companies to invest in the battered housing market.

"The main news is the regulators removing the investment cap," a trader said. "There also seems to be some bullish comments coming from (Federal Reserve chairman Ben) Bernanke when he says he will do all he can about the eco-nomy." Bernanke said the US central bank would act in a timely manner to support growth and provide insurance against downside risk.

HBOS, Britain's biggest mortgage lender, fell 6.8%, down 48p to 657p, to top the losers' list on the index after it said higher funding costs hit its margins last year and both financial and housing markets were set to stay tough, eclipsing a slim rise in profits.

The bank also said it would take a £227m hit from the value of risky assets tarnished by financial market turmoil.

Within the banking sector, Alliance & Leicester, Lloyds TSB and Royal Bank of Scotland lost between 0.9% and 1.2% as concern resurfaced over the availability of credit after last year's liquidity squeeze.

The decline in Royal came even after a block trade of 50 million shares, which prompted speculation of Qatari interest. The bank, which is due to report its 2007 earnings tomorrow, declined to comment.

Also affecting the market was a warning from the head of the Financial Services Authority that the age of cheap credit may be over.

Vedanta Resources rose 6.1% to top the FTSE-100 gainers as traders cited market talk of Chinese stake building. The company declined to comment.

Anglo American, Kazakhmys, Xstrata, BHP Billiton, Antofagasta and Rio Tinto added between 0.9% and 2.5%.

Royal & Sun Alliance was up 0.5p to 139.5p after unveiling profits at the top end of expectations. The group, which revealed plans to change its name to RSA, also said it was confident about prospects.

Among housebuilders, Barratt Developments posted a cautiously optimistic outlook for 2008. Barratt shares were up 12.25p to 436p.

NEW YORK

Wall Street finished mixed in another seesaw session yester- day after regulators allowed Fannie Mae and Freddie Mac to buy more mortgages and Federal Reserve chairman Ben Bernanke said the central bank will remain vigilant about the weakened economy.

Investors pared the market's gains after both developments had initially boosted confidence amid increasing signs of a slowing economy. Wall Street has in recent months grappled with concerns about rising prices, a weaker dollar and continued turmoil in the credit markets.

Bernanke indicated the Fed is more concerned about the sagging economy than the immediate risks of inflation. He said the Fed will "act in a timely manner as needed to support growth and to provide adequate insurance against downside risks."

The remarks came as the dollar plunged to a record low against the 15-nation euro, sending already inflated oil and gold prices further into record high territory.

The Dow Jones industrial average rose 0.07%, the S&P 500 index fell 0.09%, and the Nasdaq composite rose 0.37%. -AP