Britain's FTSE posts weekly loss; AstraZeneca bounces late

Fri May 23, 2014 12:02pm EDT

* FTSE slips 0.1 pct, posts biggest weekly loss since April

* Tullow, Burberry among top fallers

* AstraZeneca stages late bounce on Pfizer deal speculation

* UK stock market shut on Monday

By Francesco Canepa

LONDON, May 23 (Reuters) - Britain's top equity index slipped on Friday to record its biggest weekly loss in more than a month, led by selloffs in oil group Tullow and luxury brand Burberry.

AstraZeneca bucked the downtrend as traders placed speculative bets on a deal with U.S. suitor Pfizer Inc ahead of Monday's offer deadline.

Shares in Tullow fell 1.2 percent as the oil explorer said one of its wells in Ethiopia hit water. The stock has lost more than a third of its value since 2013 following a string of disappointing exploration updates.

"It's another disappointing result in East Africa for Tullow and the market, in our view, already prices in success above the existing discoveries in this region," Brian Gallagher, an analyst at Investec, said.

"This mean that Tullow needs to start finding the mark soon or the upside assumption could soon be challenged."

The FTSE 100 closed 0.1 percent lower at 6,815.75 points, recording a 0.6 percent fall on the week, the steepest since April 10.

Luxury group Burberry, down 1.7 percent, was among top FTSE fallers as a price target cut and gloomy comments by Exane reignited concerns about the brand, which is heavily exposed to volatile emerging market currencies.

Shares in AstraZeneca, however, rose 1.2 percent after staging a late bounce. Under British takeover rules, Pfizer's latest takeover offer expires on May 26, after which the U.S. group would have to wait six months before making another bid.

"The market is pricing in a cheap call for something to happen over the weekend," a trader in London said.

EU ELECTIONS

Appetite for European shares has been sapped by uncertainty over the outcome of EU parliamentary elections, in which strong performances by Eurosceptic parties could undermine governments' efforts to move towards greater integration.

Shares in Italy and Greece are likely to come under pressure if Eurosceptic parties gain ground in the European polls.

"The effect on the UK markets is to exacerbate the traditional risk-off into a long weekend, especially when the United States is also off," Mike van Dulken, head of research at Accendo Markets, said.

The market shrugged off early indications that Britain's anti-EU UKIP party had made widely anticipated gains in local elections.

"UKIP may win the European parliament elections by tapping into anti-EU, anti-immigration sentiment," analysts at Berenberg wrote in a note.

"But that is a protest vote. European election voter turnout is low, the parliament is of limited relevance, and governments often get a kicking in mid-term elections." (Additional reporting by Sudip Kar-Gupta; Editing by Ruth Pitchford)

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