FTSE down as miners, banks drag

By Dominic Lau

LONDON (Reuters) - Britain's top share index fell 1.2 percent by midday on Tuesday, snapping a four-day winning run, as miners gave up recent gains and banks remained under pressure on the glum mood in the sector.

By 1017 GMT, the FTSE 100 .FTSE was down 75.8 points at 6,300.7, after gaining 1.2 percent on Monday. The UK's blue-chip index has risen 16 percent since March 17 when it hit the year's low, but is still down 2.4 percent in 2008.

"We have done pretty well since the lows of March. This could go all the way back up again but we need to take a breather for maybe a week or so and then we will regroup and find out if there is more momentum to come to the upside," said Tom Hougaard, chief market strategist at City Index Markets.

Miners shaved 43 points off the index, with BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz), Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz), Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz) and Eurasian Natural Resources (ENRC.L: Quote, Profile, Research, Stock Buzz) losing between 3 and 5.7 percent.

"The basic resources sector is the best and only positive sector since the beginning of the year ... the sector has moved away from its uptrend recently and another short-term correction is highly possible," broker Collins Stewart said in a note, advising clients to take profits for now.

Banks also weighed as Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz), HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) and Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) were down 0.2 to 1.3 percent.

Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) shed 1 percent after the Daily Telegraph said Britain's third-biggest bank was considering making a takeover bid for a rival and could try to buy an investment bank as part of a move to raise capital from shareholders. Barclays was not immediately available to comment.

A price target cut from UBS also weighed on Barclays.