* FTSE 100 down 0.1 pct
* HSBC, Tesco hit as key shareholders cut stakes
* New York stock market closed for public holiday
* BAE Systems boosted by BofA ML upgrade -traders
By Tricia Wright
LONDON, Sept 1 Britain's top equity index edged
lower on Monday, pressured by weakness in bank HSBC and
supermarket retailer Tesco after key shareholders sold
HSBC knocked 4.5 points off the UK benchmark, accounting for
all of its fall, after one of Britain's most high-profile fund
managers, Neil Woodford, said he had sold his fund's stake in
the banking group. He cited concerns over the potential impact
on the company of several industry-wide probes.
"In particular, I am worried that the ongoing investigation
into the historic manipulation of Libor and foreign exchange
markets could expose HSBC to significant financial penalties,"
Woodford said in a blog posting on his fund's website.
CF Woodford Equity Income Fund had 2.68 percent of its
assets in HSBC shares at the end of July, according to the
Woodford - who left Invesco Perpetual earlier this year to
set up his own company - acknowledged that the size of any
potential fine was unquantifiable, but said a substantial fine
could hamper HSBC's ability to grow its dividend.
Tesco shed 1.7 percent after slumping 6.6 percent on Friday,
when it slashed its dividend after its second profit warning in
Tesco took another hit on Monday after Harris Associates,
one of its largest shareholders, sold around two-thirds of its
stake in the company. Its share price fall also weighed on
rivals such as J Sainsbury and Wm Morrison,
whose stock prices also weakened.
"There is negative pressure building up on Tesco's shares.
The dividend is going to become an issue and there is pressure
on the management to review its strategy, because it's clearly
not working," Beaufort Securities sales trader Basil Petrides
The FTSE 100 index was down by 3.32 points, or 0.1
percent, at 6,816.43 by 1050 GMT. Trading volumes were only
around a quarter of its 90-day daily average by mid-session and
were expected to remain thin, with New York closed for a public
The FTSE 100 hit a peak of 6,894.88 points in mid-May, which
marked its highest level in more than 14 years. But it has not
yet passed the 6,900 point mark, considered a key hurdle before
the FTSE can challenge record highs around 7,000 points.
Although the FTSE and other European stock markets have been
propped up in recent months by expectations of new economic
stimulus measures from the European Central Bank, some traders
were wary about betting on big near-term gains.
"I would look to sell into rallies at the moment," said
Berkeley Futures' associate director Richard Griffiths.
Among brighter spots, BAE Systems advanced 2.8
percent, topping the blue-chip leader board, with traders citing
the impact of a BofA Merrill Lynch upgrade on the defence firm
to "buy" from "underperform".
(Additional reporting by Sudip Kar-Gupta; Editing by Catherine