* FTSE 100 down 0.9 pct
* On course for sharpest daily drop in a month
* Pharma hit as tax breaks for US suitors come under threat
* Disappointing economic data across Europe weaken demand
* Ukraine/Russia tensions hit global equity markets
By Francesco Canepa
LONDON, Aug 6 Britain's top equity index was
headed for its steepest one-day fall in a month on Wednesday,
pummelled by disappointing economic data and mounting concern
over the crisis in Ukraine.
The FTSE 100 index had fallen 61.22 points, or 0.9
percent, to 6,621.26 points by 1446 GMT, after hitting a
three-month low of 6,588.43 points earlier in the session. The
index was on course for its biggest daily fall since July 8.
It extended losses after gloomy data from Britain and
continental Europe, the two regions where British blue chips
derive about half their sales. Reports showed British industrial
output and manufacturing grew less than forecast in June, Italy
unexpectedly slid into recession in the second quarter and
German industrial orders fell short of forecasts.
"The European equity indexes had been moving ahead of
events," Chris Hiorns, fund manager at Ecclesiastical, said.
"The economic recovery that this bull run in equities was based
upon is not really that evident, and that has hurt sentiment."
Drugmaker Shire, down 4.6 percent, led declines on
the FTSE after three prominent U.S. senators urged President
Barack Obama to use his executive authority to reduce or
eliminate tax breaks for companies that shift their headquarters
overseas to cut their U.S. tax bills.
Shire has agreed to a $55 billion takeover by U.S. rival
AbbVie. After buying Shire, AbbVie plans to locate the
combined company in Britain, where taxes are lower.
Fellow healthcare groups Smith & Nephew and
AstraZeneca, which had attracted interest from U.S.
companies earlier this year, fell 3.9 percent and 4.4 percent,
"If this loophole does shut down, UK healthcare (companies)
will be less attractive to U.S. names, but the latter would
still have offshore cash balances with which to invest," Sally
Taylor, an analyst at Numis, said.
Weighing on broader investor sentiment was news that Russia
had massed around 20,000 combat-ready troops on Ukraine's
eastern frontier and could use the excuse of a humanitarian or
peacekeeping mission to send them across the border, according
"As the tensions mount, we'll see more of a correction on
the equity markets. The mentality now is not to buy on dips but
to sell on rallies," said Securequity sales trader Jawaid Afsar.
Eight British blue chips went ex dividend on Wednesday,
shaving up to a further 14 points off the FTSE 100.
(Additional Reporting By Sudip Kar-Gupta; Editing by Susan