LONDON (ShareCast) - The market received a jolt before the start of trading today from an unexpected first quarter loss from Wachovia but otherwise has got off to a steady start.

The Dow-Jones industrial average is down 2 points at 12,322 and the S&P 500 is 1 point lower at 1,331. The NASDAQ Composite falls 4 to 2,286.

Wachovia is the day’s major faller after the nation’s fourth largest bank announced plans to shore up its capital base with its second massive share issue of 2008.

The bank has found it necessary to ask the market for funds again after further write-downs on mortgage related assets tipped it unexpectedly into loss in the first quarter. Fellow banking and mortgage lending stocks slide in sympathy, with Countrywide Financial, First Horizon and Washington Mutual the worst affected.

Citigroup, meanwhile, is under the cosh after Merrill Lunch cut its 2008 and 2009 earnings forecasts for the USA’s biggest bank. The broker has cut its 2008 EPS estimate to 14 cents from 24 cents and its 2009 EPS estimate from $4.04 to $3.53.

Circuit City bursts forward after film rental chain Blockbuster went public with its offer for it. Blockbuster and Circuit City have been in merger talks for some months but thus far Circuit City has declined to open its books to enable Blockbuster to perform due diligence and make a definitive offer.

On 17 February, Blockbuster made an approach to Circuit City with an indicative offer of $6 to $8 per Circuit City share. The indicated terms value Circuit City at between $1.01bn and $1.35bn and represent a premium of at least 50% over Circuit City’s closing price last Friday of $3.90.

Hydraulics maker Eaton is wanted after it announced an increase in first quarter earnings to $247m from $234m.

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