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FTSE 100 down 0.4%, FTSE 250 up 0.05%

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HSBC ( HSBC ) falls after plans to buy rest of Hang Seng Bank

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Homebuilders fall after RICS housing data

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Volution hits record high after annual results

(Updates after markets close)

Oct 9 (Reuters) - London's FTSE 100 retreated from the

previous session's record high on Thursday, as a decline in the

shares of HSBC ( HSBC ) weighed on the banking sector.

The blue-chip FTSE 100 fell 0.4%, while the

mid-cap-focused FTSE 250 was up 0.05%.

HSBC ( HSBC ) dropped 5.4%, logging its steepest one-day

drop in more than six months. The bank said it plans to buy out

minority interests in Hong Kong's Hang Seng Bank, where it holds

a majority stake, in a deal worth HK$106.1 billion ($13.63

billion).

The broader banking sector weighed heavily on

the market with a 3.7% decline.

Lloyds Banking Group ( LYG ) and Merchant bank Close

Brothers dropped 3.3% and 12.8%, respectively, after

both the lenders warned they may need to set aside more cash to

cover the costs related to a motor finance scandal.

Lloyds bank also announced plans to buy out Schroders' ( SHNWF )

49.9% stake in their UK wealth management joint venture.

Aston Martin slumped 12.6% and was among the top

losers in the FTSE 250, after European peer Ferrari's

15.4% fall on disappointment over the luxury carmaker's new

long-term financial targets.

The broader European auto stocks fell 4.4%, marking

their biggest daily fall since March.

The wider homebuilders index shed 1.9%, with

Taylor Wimpey and Barratt Redrow ( BTDPF ) dropping 4.6%

and 3.6%, respectively.

A survey published by the Royal Institution of Chartered

Surveyors said Britain's housing market lost momentum for a

third consecutive month, and its measures of buyer demand and

agreed sales were stuck in the negative territory in September.

On the flip side, Volution Group ( VLUTF ) closed at a record

high, up 5.2%, after posting strong fiscal year results, helping

the construction and materials sector inch up

0.9%.

The FTSE 100 has been rallying to record highs, on a boost

from resource-linked stocks and banks this week. It recorded its

best weekly showing since October 2008 on Friday as renewed

investor interest in pharma stocks led them to regain some

ground lost through the year.

Secure Trust Bank shares dropped 20.2% after the

bank said it expects annual underlying profit before tax to fall

below market expectations.