* FTSE 100 down 0.2 pct
* BT drops on fears over jump in pension deficit
* Housebuilders extend falls on UK rate hike jitters
By Tricia Wright
LONDON, June 16 Britain's top share index
slipped on Monday as concerns about a large increase in its
pension deficit hit BT Group, while housebuilders
extended their recent sell-off on prospects of a UK rate hike.
BT fell 2.4 percent, the most in the FTSE 100. Traders cited
a Sunday Times report which said that a three-yearly review of
the telecoms firm's 319,000-member pension scheme next month was
likely to show a 50 percent jump in the deficit to about 6
billion pounds ($10.1 billion).
This would force BT to increase its contributions and
potentially reduce its firepower in its fight with BSkyB
over sports broadcast rights, the newspaper said. Traders,
however, shrugged off the share price weakness.
"We see this as an overreaction and argue that (6 billion
pounds) is too high. The investment case for BT remains strong
and we see this as a good entry point into a company that has
the opportunity to reward patient investors," said Atif Latif,
director of trading at Guardian Stockbrokers.
BT knocked the most points off the FTSE 100, down
14.61 points, or 0.2 percent, at 6,763.24 points by 1510 GMT.
Housebuilders weakened further on comments from Bank of
England Governor Mark Carney last week that mortgage lending
practices were becoming looser and interest rates could rise
sooner than financial markets expected.
Persimmon was the second-top FTSE 100 faller, down
2.3 percent, while Barratt Developments shed 0.4
percent. Mid-cap Bovis Homes dropped 1.1 percent.
Traders also saw those dips as a buying opportunity. While
higher rates would raise the costs of borrowing to build, it
would also signal the economy, and consequently funding
prospects, were looking brighter.
"I think being long the UK housing market, which effectively
you are by going in long the UK housebuilders, is a reasonable
play," Joe Rundle, head of trading at ETX Capital, said.
($1 = 0.5956 British Pounds)
(Additional reporting by Alistair Smout; Editing by Larry King)