* Oil majors slip as crude falls to around $64/barrel
* Miners fall; metal prices weak
* Defensive pharmaceuticals in demand
By Simon Falush
LONDON, July 6 (Reuters) - Weaker crude and metal prices
sent energy stocks and miners sliding, dragging Britain's top
share index down 1 percent to its lowest close in more than two
months on Monday.
The FTSE 100 .FTSE index ended down 41.37 points at
4,194.91, its weakest close since April 29, though strength in
defensive stocks prevented a sharper decline.
Miners, hit by softer metal prices, were the main drag on
the index.
Lonmin (LMI.L) was the heaviest top-flight faller, down 8.5
percent, while Xstrata (XTA.L), Kazakhmys (KAZ.L) Anglo American
(AAL.L) and BHP Billiton (BLT.L) shed 5 to 7.5 percent.
Rio Tinto (RIO.L) shed 7 percent after it agreed to sell its
Americas food-packaging assets for $1.2 billion to packaging
group Bemis (BMS.N), raising more much-needed cash for the
indebted miner. [ID:nSYD463954]
The fall on London's blue-chip market mirrored weakness in
Europe, Asia and on Wall Street as weak jobs data on Thursday
cast a long shadow over the investment outlook.
The FTSE 100 index has surged more than 21 percent since
hitting a six-year trough in March, though it is still down 5.4
percent for the year.
"The payrolls data was a sign that expectations were running
ahead of reality, and it was a catalyst for a return to negative
sentiment, which has continued through to today," said Peter
Dixon, economist at Commerzbank.
The U.S. non-farm payrolls showed that the world's biggest
economy shed 467,000 jobs in June, 100,000 more than expected by
economists.
DEMAND SLACKENS
Like miners, falling oil majors were a heavy burden on the
blue-chip index on Monday as demand for energy slackened,
pushing the crude price CLc1 to a five-week low below $64 a
barrel, though it has since recovered slightly.
BG Group (BG.L) dropped 2 percent, while BP (BP.L) and Royal
Dutch Shell (RDSa.L) fell 2.6 percent and 2.1 percent,
respectively.
The sector was also hurt as HSBC cut its rating on Shell to
"neutral" from "overweight" and cut its price target on BP and
BG Group.
Banks also suffered from investor pessimism as investors
looked to get out of stocks seen as sensitive to risk. Royal
Bank of Scotland (RBS.L), Barclays (BARC.L), Standard Chartered
(STAN.L), HSBC (HSBA.L) and Lloyds Banking Group (LLOY.L)
retreated between 0.5 and 2.9 percent.
Defensive stocks were in demand, as investors piled into
assets perceived as resilient to economic weakness.
Household products firm Reckitt Benckiser (RB.L) grabbed the
top spot on the FTSE 100 leaderboard, up 2.5 percent, while
cigarette maker British American Tobacco (BATS.L) and
confectioner Cadbury (CBRY.L) both added 1.8 percent.
Pharmaceuticals were the biggest positive for the index,
with AstraZeneca (AZN.L), Shire (SHP.L), and GlaxoSmithKline
climbing 0.9 to 1.1 percent.
On the second tier, easyJet (EZJ.L) was among the biggest
gainers, up 2.2 percent following solid June traffic numbers
from the discount airline, which prompted Numis Securities to
raise its rating to "add" from "hold".
The U.S. corporate earnings season gets underway this week,
with results expected from oil major Chevron (CVX.N) and
aluminium producer Alcoa (AA.N).
In a relatively light week for data, the main macro focus
will be on the latest monthly Bank of England Monetary Policy
Committee meeting which starts on Wednesday, with the interest
rate decision on Thursday.
(Editing by Will Waterman)
