Britain's FTSE accelerates falls following U.S. data miss
* FTSE 100 index falls 0.6 percent
* Banks and energy led lower by heavyweights
* Index keeps weekly winning streak alive
* IAG gains over 10 percent this week after ending dispute
By Alistair Smout
LONDON, March 15 (Reuters) - Britain's main share index slipped 0.6 percent on Friday, with heavyweight banks and energy stocks leading the losses after data from the U.S. failed to boost prices past the five-year highs set in the previous session.
The FTSE 100 weakened in afternoon trade after U.S. consumer sentiment tumbled to its lowest in over a year.
British blue-chips earn nearly a quarter of their revenues in the United States, and traders had been looking to the data to provide a catalyst to push higher after initial jobless claims from the States on Thursday had helped the FTSE 100 hit a new five-year peak.
However, the expiry of options and futures contracts made trade more volatile and distracted from the day's news flow.
"The U.S. consumer confidence data was really dire, and if the stock market had truly reflected that, we'd have seen a much bigger sell-off," said Jeremy Batstone-Carr, analyst at Charles Stanley.
"But with options expiry dominating, it matters less on a day like today. I'm a bit wary of reading too much into market action on days like this."
Banks came into the spotlight, losing 1.3 percent, with traders citing the Federal Reserve's comments to Goldman Sachs and JP Morgan that they must improve their capital plans as weighing on the sector in the UK.
The UK's two biggest companies, Royal Dutch Shell and HSBC, were heavy fallers.
HSBC led the banking sector lower, falling 2.3 percent and taking more than 12 points off the index.
HSBC has seen substantial downgrades to estimates from analysts over the last week.
"While this is in line with the European average downgrade, it is the worst among the UK banks," said Simon Maughan, head of research at Olivetree Financial Group.
"HSBC looks expensive on a price-to-book basis relative to Standard Chartered. Both are up an almost identical amount year-to-date and today's sell-off may just be reining HSBC back in, relative to its closest peer."
Shell was also a top FTSE 100 faller, taking 8 points off the index, after JPMorgan cut its rating on the stock to "underweight" from "neutral".
The FTSE 100 was down 39.76 points at the close, or 0.6 percent, at 6,489.65, with the financial and energy sectors combining to take over 25 points off the index.
Before the session's trade, banks had risen 25 percent since mid-November.
"The banks had a very strong rally, and it's a lot to ask them to repeat that. So some of the big components of the FTSE look set for a pause," said Robert Quinn, chief European equity strategist at Standard & Poor's Capital IQ, adding that equities could pull back even if bond markets remained calm.
"You're running out of catalysts, and equities look set to create their own correction."
The index narrowly posted its fifth consecutive weekly gain, gaining 0.1 percent on the week.
British Airways' owner, International Consolidated Airlines Group (IAG), rose 3.6 percent on the day, making it a top FTSE 100 gainer, as Morgan Stanley added it to its 'Europe best ideas list'.
IAG gained 10.5 percent on the week as a whole, benefiting from the conclusion of a prolonged industrial dispute at its Iberia operation. (Editing by Kevin Liffey)
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