Defensives pull FTSE down 0.4 pct at end of Q2
* Defensives weak at end of second quarter
* Insurers retrace previous session gains
* UK final Q1 GDP awaited
By Jon Hopkins
LONDON, June 30 (Reuters) - Britain's leading share index shed 0.4 percent in early trade on Tuesday reflecting position-squaring at the end of the second quarter and caution ahead of final UK GDP data, with defensives leading the fallers.
By 0805 GMT, the FTSE 100 .FTSE index was 16.93 points lower at 4,277.10 after gaining 1.3 percent in the previous session.
The blue chip index is up 9.4 percent so far on the quarter and on track for its best such performance since the final quarter of 2003. The index has gained 22.5 percent since touching a six-year low on March 9.
"We are struggling a little bit (today) but to be honest we have had all from the market that we could possibly have expected ... considering that we are still someway away from 'proper recovery', and all we are doing is just flattening out, said David Buik, senior partner at BGC Partners.
Life insurers were the weakest blue chip sector, retracing some strong gains made on Monday, with Prudential (PRU.L), Standard Life (SL.L), Old Mutual OLM.L and Friends Provident FP.L down 1.5 to 2.8 percent.
Defensive issues also featured among the biggest blue chip fallers, notably food producers and tobaccos as investors positioned themselves for the new quarter.
Cadbury (CBRY.L) shed 2.1 percent and Unilever (ULVR.L) fell 2.3 percent, while British American Tobacco (BATS.L) and Imperial Tobacco (IMT.L) respectively lost 1.1 and 0.7 percent.
Utilities were also unsettled by negative broker comment.
United Utilities (UU.L) fell 2.9 percent as JP Morgan cut its rating to "neutral" from "overweight" in a sector review.
The broker also cut its target price for Severn Trent (SVT.L), down 2.06 percent.
Heavyweight commodity issues were mixed, with strength in crude CLc1 and metal prices aiding BP (BP.L), Tullow Oil (TLW.L), BHP Billiton (BLT.L) and Eurasian Natural Resources (ENRC.L) up between 0.5 to 0.7 percent.
But among the fallers, Royal Dutch Shell (RDSa.L) and BG Group (BG.L) lost 0.8 and 0.4 percent respectively, while Rio Tinto (RIO.L), Anglo American (AAL.L) and Xstrata (XTA.L) fell between 0.3 and 1.7 percent.
BANKS RESILIENT
Banks bucked the weaker trend, finding support at the end of the quarter helped by recent bullish broker comment. Barclays (BARC.L), Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L) took on 0.6 to 2.8 percent, although HSBC (HSBA.L) and Standard Chartered (STAN.L) shed 0.6 and 1.6 percent respectively.
The British government gave further hints on Monday that future regulation of the banking sector would be in the hands of a beefed-up FSA rather than the Bank of England. [ID:nLT399201]
Wolseley (WOS.L) was the top blue chip riser, up 3 percent as investors responded positively to a change of chief executive at the plumbing supplies firm. [ID:nWLA7811]
Investors were looking to the final reading of UK GDP data for the first quarter, due out at 0830 GMT, for more evidence that the economy may be starting to recover from recession.
UK Q1 GDP is seen contracting by 2.1 percent on the quarter and 4.3 percent on the year.
"I think it's just going to be a war of attrition between the Green Shoot brigade and the princes of darkness who support the fact that the recession is not over, and markets are just going to respond on a daily basis to economic and corporate news whether it's good or bad," added Buik.
British house prices rose for the second month running in June, leaving them less than 10 percent down on a year ago, the Nationwide building society said on Tuesday, in another sign the market may be stabilising. [ID:nLAG003551]
And British consumer morale improved in June to its best in 14 months as people became confident their own finances would improve for the first time in more than a year, a GfK survey showed. [ID:nLT385627] (Editing by Jon Loades-Carter)
