Shares of Royal Bank of Scotland, the UK's second-largest bank by market value, were lowered to 'neutral' from 'overweight' by HSBC, citing a possible "weakening" of revenue growth.

The bank's share price forecast was also reduced from 2,100p to 2,000p by HSBC. RBS forecast last week that first-half profit will increase in line with analysts' estimates as lending margins narrow. Royal Bank said its net interest margin, the difference between the interest rate it receives on lending and what it pays on deposits, will shrink. The margin is being hurt by the smaller gap between short and long term interest rates. RBS bought Cleveland-based Charter One Financial in August 2004 for about $10.3bn as part of a US expansion that began with the purchase of Providence in 1988.

US operations generates about a quarter of Royal Bank's profit.

Tesco

Tesco reported on Friday the slowest increase in revenue in over two years as Sainsbury's and Asda stepped up competition at the same time that consumers pared spending. Sales at UK stores open a least a year rose 4.5% excluding petrol in the first quarter ended 27 May. Revenue gained 4.9% in the fourth quarter of 2005. Tesco gets around three-quarters of sales from its domestic market. The retailer is battling against slower consumer spending and tougher competition after increasing its share of the UK grocery market to a record 31% this year. The shares have gained 4.7% in the past year, less than Sainsbury's 12% climb.

Planning restrictions in the UK and negative publicity surrounding its expansion throughout its home country has encouraged the retailer to look abroad for growth.