* FTSE 100 sheds 0.6 percent after strong gains last week
* Banks weak; Barclays drops as Qatar monetizes warrants
* Defensives in demand as investors' risk appetite fades
By Jon Hopkins
LONDON, Nov 26 British blue chip shares fell on
Monday, with Barclays tumbling more than 5 percent, as
the market retreated a f ter its best performance this year last
Barclays dropped 5.4 percent after top shareholder Qatar
Holdings cashed in its remaining warrants in the UK bank, a move
which led to the sale of up to 303.3 million shares.
Bookrunners Deutsche Bank and Goldman Sachs said the
Barclays shares were sold at 244 pence each, a 4 percent
discount to Friday's closing price, but did not confirm whether
all the stock had been sold.
"With the stock trading at a shade under 244 pence, we are
seeing renewed long interest with some traders taking the view
that this sharp pullback offers a buying opportunity and adding
further long holdings to their portfolios," Rik Thakrar, risk
manager and senior dealer at Spread Co., said.
Overall, banking was the weakest blue chip
sector, knocking over 11 points off the FTSE 100 index. The
sector, though, showed little reaction to the surprise news of
the appointment of Bank of Canada chief Mark Carney as the next
governor of the Bank of England.
UK finance minister George Osborne said Carney brought the
skills to revamp financial regulation at a time when the BoE
will take on a new role in charge of British bank supervision.
Aside from the drop by Barclays, RBS fell 3.2
percent on concerns it could receive separate fines for its
alleged involvement in the Libor-fixing controversy, one from
the UK's Financial Services Authority and one from U.S.
regulators, according to the Sunday Telegraph.
Fund manager Aberdeen Asset Management was also
weak, dropping 2 percent in the absence of news of any immediate
plans for buybacks or a special dividend. The fund house
reported its net cash reserves had more than doubled in the last
12 months as it posted an 11 percent rise in full-year revenues.
"With a net cash balance in excess of our expectation, we
believe that the company could signal its willingness to enhance
shareholder returns through the distribution of excess capital
to shareholders," RBC analysts said in a note.
Risk-sensitive commodity stocks also fell back, with miners
and energy stocks retreating after
posting gains last week, accounting for more than 5 points of
the FTSE 100's decline.
The UK blue chip index closed down 32.42 points, or
0.6 percent, at 5,786.72, having risen 3.8 percent last week and
posting five straight days of gains for only the third time this
Trading was modest, at around 80 percent of the FTSE 100's
average 90-day daily volume, as investors awaited the outcome of
a euro zone meeting to attempt to agree another bailout payment
"We are seeing a general sense of apathy from investors as
the recent rally was built on weak foundations. Despite the
abundant optimism that a solution to the U.S. fiscal cliff will
be found on time, as we edge closer towards it, nerves and
volatility will increase. Savvy investors will no doubt remain
on the sidelines," Mike McCudden, head of derivatives at
Interactive Investor, said.
U.S. blue chips were down 0.8 percent by London's
close, as investors awaited the news on Greece and as
negotiations continued in Washington on a deal to avoid the U.S.
"fiscal cliff" of automatic tax increases and government
spending cuts, scheduled to come into force on Jan. 1.
Among the minority of blue chip gainers, stocks perceived as
more defensive found support, led by the tobacco, utilities and
household products sectors, as risk appetite faded.
Real estate firm British Land was also in demand,
adding 0.4 percent as UBS upgraded it to "buy" from "neutral".
(Editing by Susan Fenton)