Banks pull FTSE 0.7 pct lower; oils rise
* Banks fall on financial health fears
* Miners mixed; base metals down; gold, silver up
* Oils higher; crude up with OPEC news
By Jon Hopkins
LONDON, May 28 (Reuters) - Britain's leading shares fell 0.7 percent on Thursday as renewed jitters over the health of the financial sector hit banks and offset gains by heavyweight oils.
At the close the FTSE 100 .FTSE was 28.69 points lower at 4,387.54, snapping two sessions of gains this week. The UK benchmark is down around 1.6 percent this year but has rallied 26 percent since hitting a six-year low on March 9.
Banks were the worst performing blue chips, with Barclays (BARC.L), HSBC (HSBA.L), Standard Chartered (STAN.L), Lloyds Banking Group (LLOY.L) and Royal Bank of Scotland (RBS.L) down 0.8 percent to 4.6 percent.
Britain's financial regulator disclosed on Thursday details of its 'stress tests' for banks saying it had based them on the assumption that GDP would shrink 6 percent. [ID:nLS624063]
"The market appears to have priced in more adverse test conditions, causing many traders to reassess their assumptions about the UK banking sector's ability to weather a sustained economic downturn," said David Evans, market analyst at BetOnMarkets.com.
The biggest blue chip loser was Man Group (EMG.L), the world's largest listed hedge fund firm, which shed 6.9 percent after it said its assets under management fell to $44 billion by May 26, down from $46.8 billion at end-March [ID:nLR215413].
Fund manager Schroders (SDR.L) fell 4.4 percent, while insurers Prudential (PRU.L), Standard Life (SL.L), and Aviva (AV.L) lost 2.0 to 3.2 percent.
Oil majors were higher with the crude price CLc1 after OPEC ministers meeting in Vienna decided, as widely anticipated, to leave the group's crude output unchanged at 24.85 million barrels per day. BP (BP.L) and Royal Dutch Shell (RDSa.L) gained 0.6 and 1.0 percent respectively.
Oil explorer Cairn Energy (CNE.L) added 3.5 percent after its Cairn India (CAIL.BO) unit said it was ready to start producing from its Rajasthan fields. [ID:nBOM487179]
Tullow Oil (TLW.L) rallied 2.5 percent after recent falls.
Miners were mixed as base metal prices stayed weak while and gold and silver prices rose. Mexican silver miner Fresnillo (FRES.L) was a top blue chip riser, up 3.4 percent, while gold producer Randgold Resources (RRS.L) gained 3.1 percent and platinum miner Lonmin (LMI.L) added 1.2 percent.
But BHP Billiton (BLT.L), Vedanta Resources (VED.L), Kazakhmys (KAZ.L), and Xstrata (XTA.L) lost 0.2 to 1.7 percent.
WALL STREET WOBBLE OVERCOME
The U.S. Dow Jones Industrials index .DJI was slightly higher by London's close having overcome an early wobble when U.S. new home sales numbers tempered recent optimism about the economy's prospects.
UK data from the Confederation of British Industry showed retail sales fell more than expected in May and retailers are expecting a further deterioration next month. [ID:nLS489614]
Among UK mid-caps, plumbing supplies firm Wolseley (WOS.L) plunged 18.2 percent after saying nine-month profit slumped 80 percent, as most of its markets weakened in March and April.
Builders merchants Travis Perkins (TPK.L) shed 7.9 percent, and housebuilders also fell with Taylor Woodrow (TW.L), Persimmon (PSN.L), and Bellway (BWY.L) down 3.4 to 7.2 percent.
Commercial broadcaster ITV was the top mid-cap riser, up 17.5 percent to take its two-day rally to around 30 percent as another broker upgraded its rating. Banc 0f America-Merrill Lynch followed in the footsteps of Goldman Sachs on Wednesday.
"The next week or two could prove decisive in determining the longer term direction for markets and at the moment traders seem divided as to whether this is likely to be a slide back a few hundred points or a further leap towards pre-crisis levels, said David Jones, chief market strategist at IG Index. (Editing by Greg Mahlich)
