REFILE-FTSE drops 1 pct as U.S. recession fears hit banks

(Fixes typographical error in Enodis in last paragraph)

By Rebekah Curtis

LONDON, April 14 (Reuters) - Britain's FTSE 100 .FTSE fell for a fifth session early on Monday, tracking steep losses in Asia and the U.S. as investors dumped financials on a growing conviction that the United States was tipping into recession.

Banks were standout losers and all traded lower, with Alliance & Leicester ALLL.L down 2.9 percent, while Barclays (BARC.L) and Royal Bank of Scotland (RBS.L) both lost 2.3 percent.

Bradford & Bingley BB.L fell about 3 percent after the bank said on Sunday it was not intending to raise cash through a rights issue or any other method, rejecting a report that it was looking to strengthen its balance sheet. [ID:nL13342438]

By 0749 GMT the leading share index was down 56.3 points at 5,839.2 as shares across Europe fell about 1 percent.

U.S. shares slumped on Friday after a nasty earnings surprise from General Electric Co (GE.N) and a 26-year low in U.S. consumer sentiment provided investors with further evidence that a U.S. recession was looming. Asian equities lurched on Monday, with Japan's Nikkei .N225 ending down more than 3 percent.

U.S. banks JPMorgan (JPM.N), Merrill Lynch MER.N and Citigroup (C.N) are also set to report first-quarter earnings this week.

"Sentiment at the moment is pretty awful," said Neil Parker, a strategist at Royal Bank of Scotland.

"Potentially a push back higher is on the horizon now as we head later into the second quarter, but I don't think we'll get the full beginnings of a recovery across all of the equity markets until we...start getting half-year results out of a lot of the major U.S. companies," he said.

"Because they are the ones that are leading sentiment and the rest of the western world is riding along on the wave."

U.S. retail sales, due at 1230 GMT, will provide a further gauge of the strength of the world's largest economy. Economists in a Reuters survey expected the reading to be unchanged versus a 0.6 percent fall in February.

DOWNGRADE HITS BA

British Airways (BAY.L) dropped 3.7 percent after Morgan Stanley cut its rating on the airline stock to "underweight" from "equal weight," and reduced its price target to 120 pence from 245 pence.

Sage Group (SGE.L), Britain's biggest software company, shed more than 3 percent despite saying it was on track to hit analysts' forecasts for the year.

On average, analysts expect the Newcastle-based firm to report a full year pretax profit of 266 million pounds ($525.4 million) on revenue of 1.25 billion, according to a company poll of 19 investment banks.

Among midcaps, Mitchells & Butlers (MAB.L) rose 0.9 percent after it said a number of private equity firms had offered to take a stake in it and it was interested in buying Punch's (PUB.L) Spirit managed pub division. Punch gained 2.2 percent. [ID:nL14498635]

Enodis ENO.L added 5.3 percent after Manitowoc Co Inc (MTW.N), a U.S. maker of cranes and restaurant equipment, said it had agreed to acquire the British food equipment maker for around 948 million pounds ($1.9 billion). (Editing by Elizabeth Fullerton/Quentin Bryar)