FTSE down as U.S. sentiment weighs; BoE eyed

By Michael Taylor

LONDON, Aug 1 (Reuters) - The FTSE 100 .FTSE of Britain's leading shares ended 1.7 percent lower on Wednesday as the U.S. credit crisis continued to weigh and as traders looked ahead to the Bank of England's (BoE) interest rate decision on Thursday.

The FTSE 100 ended down 109.5 points at 6,250.6, having earlier hit a session low of 6,187.2.

Subprime mortgage woes from the United States pushed numerous sectors deep into negative territory with banks, miners and oil companies hardest hit.

Top losers on the day included BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), and Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz).

Among banks, Northern Rock NRK.L dropped 4.4 percent and HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) shed 1.5 percent despite Citigroup raising the latter's rating to "buy" from "hold" and price target to 1,050 pence from 1,000 pence.

HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), Britain's biggest mortgage lender, dipped 2.8 percent. It unveiled a 13 percent jump in profits and its biggest dividend rise since it was formed six years ago but problems in its core UK retail unit hit its shares.

"It's the overnight news from the U.S. which has set the tone for the market all day," said Dresdner Kleinwort strategist Philip Isherwood. "We're really just waiting to see what the actual direction for the U.S is going to be. It's as good as it gets on the U.S."

"The story overnight was effectively driven by more bad news coming out of the U.S. housing sector both in terms of insurance companies ... and a mortgage provider unable to support their loans," Isherwood added. "Generally speaking, it is the extended credit in the U.S. housing market. The market doesn't like the risk."