Commods, banks pull FTSE down 1.3 percent; RBS, Lloyds up
* Commodity issues sold off on recovery concerns
* Financials fall after slide by U.S. peers
* Bailed-out RBS, Lloyds diverge on government plans
By Jon Hopkins
LONDON, Nov 3 (Reuters) - Britain's top shares shed 1.3 pct in early deals on Tuesday reversing gains made in the previous session, led lower by weak banks, and commodity stocks in a broad-based sell-off with investors jittery on recovery uncertainties.
At 0916 GMT, the FTSE 100 .FTSE index was 65.30 points lower at 5,039.20 having gained 1.2 percent on Monday.
"Investors are understandably shunning the market with pronouncements due this week from the Federal Reserve, Bank of England, and ECB, and non-farm payrolls data due on Friday," said David Morrison, market strategist at GFT Global.
Banks stood out as Lloyds Banking Group (LLOY.L) launched a record 13.5 billion pounds ($22 billion) rights issue and along with rival Royal Bank of Scotland (RBS.L) agreed to sell off some businesses to limit their reliance on government support.
The British Treasury said Lloyds and rival Royal Bank of Scotland (RBS.L) would between them have to sell off businesses equating to 10 percent of the UK retail banking market. [ID:nL3540088]
Lloyds Banking shares rose 4.5 percent expressing relief on confirmation of long-expected plans, while RBS shares shed 1.7 percent, but were off earlier lows.
The other UK-listed banks fell reflecting as well a sell-off by their U.S. peers overnight after a bankruptcy move by lender CIT and following comments from a Federal Reserve official warning about loan losses. [ID:nN02443852]
Disappointing results from Swiss peer UBS (UBSN.VX) also weighed, with HSBC (HSBA.L), Standard Chartered (STAN.L), and Barclays (BARC.L) losing 0.8 to 2.8 percent.
"Not only are there no reasons for investors to get involved in the market, there are plenty of reasons for them to be taking their cash off the table," Morrison said.
Heavyweight miners were also a big drag on the FTSE 100 as copper prices fell back MCU3 on demand concerns, with Fresnillo (FRES.L), BHP Billiton (BLT.L), Xstrata (XTA.L), and Vedanta Resources (VED.L) shedding 2.0 to 3.6 percent.
Energy issues fell as crude prices CLc1 weakened, with BP (BP.L), BG Group (BG.L), Tullow Oil (TLW.L), and Cairn Energy (CNE.L) down 0.5 to 2.4 percent.
Royal Dutch Shell (RDSa.L) bucked the trend, up 0.4 percent as Credit Suisse upgraded its stance to "neutral" from "underperform".
Life insurers were also weak, with Old Mutual (OML.L), Aviva (AV.L), Standard Life (SL.L), and RSA Insurance (RSA.L) down 1.6 to 3.3 percent.
The IPO of Dutch insurer Delta Lloyd (DLL.AS), majority owned by Aviva, has been priced at 16 euros per share, the lower end of the expected range. [ID:nL3529121]
Legal & General (LGEN.L) managed to buck the weak market trend, however, adding 0.3 percent after its 9-month new business numbers came in broadly as-expecetd. [ID:nL3553528]
Hedge fund firm Man Group (EMG.L) also found gains, adding 0.9 percent as UBS raised its rating to "neutral" from "sell" ahead of upcoming news.
Rolls Royce (RR.L) was a blue chip faller, down 3.3 percent as the engine maker's trading update failed to impress. [ID:nL3072835] (Editing by Mike Nesbit)
