* FTSE 100 down 0.1 percent, just off 4-1/2 year highs
* Vodafone falls; U.S. partner Verizon posts Q4 loss
* Banks lower, tracking falls by German peers
* Miners weak; Fresnillo down after Q4 update
By Jon Hopkins
LONDON, Jan 22 Falls by market heavyweight
Vodafone, banks and mining stocks pulled Britain's top shares
lower on Tuesday, with the index slipping back from its highest
level in four-and-a-half years.
Falls by Vodafone alone knocked over 3 points off
the FTSE 100 index, with the mobile telecom group down
1.2 percent, as its U.S. wireless joint venture partner Verizon
posted a fourth quarter loss.
Traders also attributed Vodafone's decline to a price target
cut by Jefferies International.
At 1200 GMT, the FTSE 100 index was down 5.18
points, or 0.1 percent at 6,175.80 points, retreating after
having hit a fresh 2013 peak at 6,184.02 in early trade.
Banks were the main sector fallers, also taking
over 3 points off the blue chip index, with traders citing
caution over a report that several German banks had been asked
to simulate a split of their investment banking operations.
As well as the report in Germany's Boersenzeitung newspaper,
several traders also cited vague talk that Deutsche Bank
could issue a profit warning.
Among weaker miners, Mexican silver miner Fresnillo
was the biggest FTSE 100 percentage faller, dropping 3.8 percent
after saying it saw stable silver output in 2013 and reiterating
it wanted to increase the free float in its shareholding.
"There is nothing intrinsically bad in today's production
report from Fresnillo, apart from the lower ore grades at the
Cienega facility. However a lot of the statement refers to 'jam
tomorrow' work in progress, such as the Herradura, Saucito and
San Julian facilities, added to which the company is engaged in
ongoing cost control operations to battle inflation in operating
materials," Richard Curr, head of dealing at Prime Markets said.
"Arguably, Fresnillo has traded ahead of events since
September last year, and in spite of the fall in the share price
since December, Prime Markets believe a retest of 200-day moving
average support looks almost inevitable, after which a period of
consolidation is expected as the new facilities come onstream.
Among other individual fallers, media group Pearson
fell sharply for the second day in a row, off 1.3 percent as
brokers cut their targets on the company after the media group
reported earlier this week a fall in earnings and warned of
another tough year.
Deutsche Bank cut its price target on Pearson to 1,325 pence
from 1,350 pence, while Jefferies reduced its price target to
1,290 pence from 1,315 pence. Both Deutsche Bank and Jefferies
kept "hold" ratings on Pearson shares.
Credit Suisse has reduced its allocation in UK equities,
saying the relatively defensive market tends to lag in times of
economic recovery, but it retains an "overweight" stance on the
market, still seeing opportunities in exporters and real estate.
"The FTSE 100 is a defensive market by sector
composition and thus tends to underperform when economic lead
indicators and global equity markets rise," Credit Suisse said
in a global strategy review.
Stocks perceived as defensive provided the main underlying
strength for the market, with drugs, drinks, and utilities
stocks in demand.
Investec Securities provided a lift for the utilities as it
initiated coverage on the sector with "buy" recommendations on
Centrica, Pennon Group and United Utilities
"Overall, we believe that the Utilities sector continues to
be a 'Steady Eddie', performing as it should in uncertain
markets ... By definition, the sector is likely to underperform
when the market finally gains momentum, but we remain confident
that there is still some very good value there, backed up by
solid yields," Investec said in a note.
(Reporting by Jon Hopkins; editing by Ron Askew)