LONDON (ShareCast) - US stocks have opened lower after worse than expected results from Fannie Mae and Sara Lee.

Federal National Mortgage Association, colloquially known as Fannie Mae, is to raise another $6bn in capital and slash its dividend after huge write-downs plunged it into the red in the first quarter.

The largest buyer of US home loans reported a first quarter net loss of $2.19bn, down from a net profit of $961m a year earlier, as it took a $4.4bn hit on losses on derivatives and trading securities plus a $3.2bn charge for credit-related expenses.

The results suggested that the US housing slump is even worse than expected, though some good news came in the form of a decision by the Office of Federal Housing Enterprise Oversight to reduce the surplus capital Fannie May is obliged to hold by 5 percentage points to 15%; another 5 point cut is due to come into effect in September of this year provided there is no material adverse change in the company’s regulatory compliance.

Across the markets, the Dow Jones industrial average is down 80 at 12,889 and the S&P 500 is 6 points lower at 1,400. The NASDAQ Composite is 14 points easier at 2,450.

Sara Lee is the biggest faller among blue-chips after the food producer said annual profit this year will be lower than previously indicated.

Countrywide Financial is another big faller despite a report in the Wall Street Journal claiming that Bank of America is still committed to its proposed takeover of the mortgage lender.

Legg Mason is the latest to suffer from the fall-out from the sub-prime crisis. The asset manager lost $255m in the fourth quarter of its financial year after bailing out money-market funds hurt by investments in debt backed by sub-prime mortgages.

Cosmetics company Estee Lauder is smelling of roses, however, after lifting its full-year profit forecast from earnings per share in the range of $2.28 - $2.40 to a range of $2.34 - $2.40.

• News Channel