Fall in financial stocks hits Britain's FTSE

Mon Jul 28, 2014 10:45am EDT

* Aberdeen AM falls after suffering outflows

* Lloyds falls after agreeing to pay fines to regulators

* FTSE 100 down 0.4 pct

* Uncertainty over Ukraine still weighs on equity markets

By Sudip Kar-Gupta

LONDON, July 28 (Reuters) - A slide in financial stocks, including Aberdeen Asset Management and Lloyds Banking Group, knocked back Britain's top equity index on Monday.

The blue-chip FTSE 100 index was down by 0.4 percent, or 29 points, at 6,762.55 points going into the close of trading.

Fund management group Aberdeen Asset Management was the worst-performing FTSE 100 stock in percentage terms, falling 5.2 percent after the company reported fund outflows in its third quarter.

Lloyds fell 0.4 percent after it agreed to pay fines totalling $370 million to U.S. and British authorities investigating its part in a global interest rate rigging scandal and manipulating fees for a British government lending scheme.

The decline in Lloyds' shares was modest as the news had been widely flagged, but it still dragged down the shares of its rival part-nationalised lender Royal Bank of Scotland, which fell by 3.2 percent.

"The banks have taken a bit of a hit this afternoon. The Lloyds' fine was a bit bigger than I thought," said Berkeley Futures associate director Richard Griffiths.

Another factor weighing on equity markets was ongoing tensions between Russia and Ukraine. A total of 298 people were killed on July 17 when a Malaysian passenger plane was shot down over rebel-held territory in eastern Ukraine, where Kiev's forces are fighting pro-Russian separatists.

A White House adviser said on Monday that U.S. President Barack Obama was scheduled to speak on Monday with four European leaders about the situation in Ukraine.

"There's the potential for further developments in Ukraine, which is keeping everyone on the back foot," said IG analyst Chris Beauchamp.

Uncertainty over Ukraine has contributed to pushing the FTSE 100 down by 1.5 percent from peaks reached in May and early July.

However, many investors still think the index will recover later in the year to hit a record high of 7,000 points, helped by a gradual recovery in corporate profits and the British economy. (Additional reporting by Francesco Canepa; Editing by Gareth Jones and Susan Fenton)