* FTSE 100 falls 0.3 percent, hits 3-week low
* Banking, energy stocks under pressure
* Long-term outlook bright, FTSE seen hitting record high
By Atul Prakash
LONDON, March 11 Britain's top share index fell
to a three-week low on Tuesday as lingering tensions between
Ukraine and Russia hurt financials and China growth concerns
prompted investors to trim their exposure to commodity stocks.
The blue-chip FTSE 100 index was down 0.3 percent at
6,672.85 points by 1135 GMT after falling as much as 6,660.59,
the lowest since the middle of February.
The UK banking index fell 0.5 percent, the top
decliner on the FTSE 100, with investors avoiding sectors
exposed to geopolitical tensions over Ukraine that continued to
build. With diplomacy at a standstill, Ukraine's acting
president announced the formation of a volunteer national guard.
Shares in Barclays slipped 2.8 percent, while Royal
Bank of Scotland dropped 2.3 percent.
"Investors are proceeding with caution as there are some
concerns that the geopolitical tensions could escalate and a
slower growth in China could hurt demand for materials," said
Tom Robertson, senior trader at Accendo Markets.
"Any further tension could keep cyclicals under pressure."
Commodity shares lost ground on Tuesday, with the UK oil and
gas index dropping 0.2 percent and the mining index
down 0.1 percent on persistent concerns about raw
materials demand in China after recent disappointing data.
But many fund managers with a longer-term view said the fact
that falls in stock markets have been relatively short-lived
points to underlying optimism that the FTSE will gradually rise
later in 2014 as Britain's economic recovery strengthens.
"There's still money coming in, with net inflows coming into
Europe," SVM Asset Management managing director Colin McLean
said, adding the FTSE may hit a record high of 7,000 points in
the second quarter of 2014.
While investors have taken money out of emerging markets,
European stocks have attracted a record $36 billion so far in
2014, according to data from EPFR Global, with U.S. investors in
Analysts said a gradual recovery in the pace of economic
growth, which was further reflected in manufacturing numbers on
Tuesday, will also support equities in the longer-term.
Data showed British manufacturers started 2014 on a solid
footing in January, with output growing by 0.4 percent in
January from December and rising 3.3 percent from the same month
"UK industrial activity continues to progress in the right
direction at the start of the year. Business confidence
indicators lost some steam in January-February, but remain
elevated and still consistent with robust growth in the factory
sector," wrote Annalisa Piazza, analyst at Newedge Strategy.