Sympathy for the U.K. Stock Benchmark

EWU has a 23% weighting in financial stocks, down from 29% a year ago. HSBC(HBC Quote) is the largest financial in the fund and has held up relatively well, dropping 30% this year. In addition to HBC, the fund is heavy in Barclays(BCS Quote) and Royal Bank of Scotland(RBS Quote), down 70% and 87%, respectively.

EWU has a large exposure to mining, with Rio Tinto(RTP Quote), BHP Billiton(BBL Quote) and Anglo American(AAUK Quote), down 55%, 44% and 60%, respectively. The three materials stocks peaked in May.

One aspect of a bounce is that the declines were so fast, a corrective bounce (or maybe the real thing) should be coming and may have already started. Last week, as the S&P 500 snapped back 11%, EWU came back 20%. The three mining stocks mentioned above rallied more than 30%, and RBS and HBC were up 17%. (BCS was the laggard, dropping 10% on news of a controversial capital-raising from Qatar and Abu Dhabi.)

The moves in those stocks last week are big when viewed from the bottom but not from the top. BBL is still 60% from its peak. The idea here is that if a bounce continues or happens at some point in the near future (one of the two seems reasonable), industries such as mining and financials have a chance for exaggerated moves up just as the declines down may have been exaggerated.

One other short-term kicker could be EWU's dividend. The ex-date is Dec. 23, but the amount of the dividend has not been announced. The trailing yield is 7.1%, and it is unlikely to be as much as that after this next dividend. Part of the U.K. bailout plan is that banks may not be able to pay dividends on common shares until they have bought back the preferred shares being issued to the government. The details are still being sorted out, but the dividend about to be paid has accrued from dividends collected by the fund previously. AAUK client and personal holding