* FTSE 100 index closes 0.06 pct lower
* Miners, banks face selling pressure
* Analysts say longer-term outlook positive
By Atul Prakash
LONDON, March 11 Britain's top share index
steadied on Tuesday after hitting a three-week low, with some
investors seeing value in beaten-down stocks, although the
market remained vulnerable to further declines in the near term.
The blue-chip FTSE 100 index closed 0.06 percent
lower at 6,685.52 points after falling to 6,660.59, its lowest
since the middle of February. It fell in the previous two
sessions on lingering tensions between Ukraine and Russia and on
concerns about China's economic growth.
Analysts said that the market could witness further weakness
in the near term as those geopolitical tensions remained in the
background and a slowdown in China's economic growth could
affect prices and demand for raw materials, but the market was
poised to scale new highs in the longer term.
"The outlook remains good for equity markets as corporate
profitability is still strong," Henk Potts, equity strategist at
Barclays Wealth, said. "What we have been saying to clients is
that there is probably greater headroom in Europe than in the
However, banks came under pressure on Tuesday, with the UK
banking index falling 0.5 percent, dragged down by
a 3 percent drop in Royal Bank of Scotland and a 2.4
percent slide in Barclays.
"We are seeing a degree of softness across the banking
sector and a lot of it is to do with the escalation of the forex
manipulation scandal, in which some of these have been
implicated," Brenda Kelly, analyst at IG, said.
"We are still not clear exactly what sort of provisions will
need to be made by the banks in question, should evidence come
to light that there was collusion to manipulate the foreign
Regulators are investigating allegations that senior traders
exchanged market-sensitive information via electronic
communications to manipulate key currency rates, known as
The Bank of England said it would overhaul the way it works
with banks and financial markets as it faces criticism of its
response to signs of possible manipulation of foreign exchanges
Basic resources stocks remained weak, continuing to be
dragged down by concerns about the pace of economic growth in
top metals consumer China after data over the weekend showed
Chinese exports unexpectedly fell in February.
The UK mining index slipped 0.4 percent,
following a 1.8 percent drop on Monday after the Chinese export
data. However, some analysts remained positive on the sector's
outlook going forward.
"In the short term, the materials sector is sensitive to
macroeconomic developments in China," Robert Parkes, equity
strategist, HSBC Securities, said.
"We are overweight. The sector is deeply unloved, it is
attractively valued and we are seeing some positive earnings
momentum emerging. We expect the sector's better capex
discipline to lead to an improvement in free cash flow."