LONDON, Jan 13 (Reuters)- Britain's FTSE 100 traded
slightly lower on Monday, lagging its continental peers as falls
in heavyweight oil stocks more than offset a rally in banks.
The latter were boosted by the prospect of lighter leverage
Energy shares tracked crude prices lower as an international
deal on Iran's nuclear programme was seen as potentially paving
the way for a lifting of sanctions on the country, bringing
Iranian oil back onto the global market.
Oil major BP was down 0.9 percent, also hit buy a
target price cut from analysts at Barclays.
The energy sector, the largest on the FTSE, knocked 7.1
points off the index, which was down 3.78 points, or 0.1 percent
at 6,736.16 points 1155 GMT.
Defensive food & beverage, pharmaceutical and utilities
shares also weighed on the market as investors switched into
sectors that offer greater exposure to a nascent European
economic recovery, such as banks and auto parts.
The FTSE has risen roughly 3.5 percent in the past six
months, compared with an 11 percent increase for the
pan-European FTSEurofirst 300, due to the British
index's higher weightings in defensive sectors and in shares
that depend on commodity prices, which have mostly flatlined or
fallen in recent months.
"We see more opportunities in continental Europe, Nick
Nelson, a strategist at UBS, said. "We've still got a (FTSE)
target of 7,400 for the year but we just think you're going to
see better performance when you look across the wider European
Banks helped keep the FTSE afloat after regulators agreed on
Sunday that they would be able to include derivatives on a net
rather than the much bigger gross basis when calculating
leverage ratios under Basel III.
The easing is aimed at keeping the global economy financed
as it means banks will not have an incentive to ditch some types
of assets, such as loans to companies, in order to meet the
"It's all about the banks. The relaxing of the regulations
is really improving investor sentiment in the sector," said
Jonathan Roy, a broker at London Stone Securities.
Barclays rose 2.6 percent, Royal Bank of Scotland
was up 2.5 percent and Lloyds up 1.1 percent.
"This change in guidance around the leverage ratio
calculation is likely to be most beneficial for investment
banks, in our view, and hence of the quoted UK banks we would
expect Barclays' shares to react most positively to this news,"
Gary Greenwood, analyst at Shore Capital, said in a note.
WM Morrison rose 4.9 percent to the top of the FTSE
after media reports that, following weaker than expected
Christmas sales, the grocer was under pressure from investors to
sell part of its property portfolio, freeing up cash to return
"(Property sales worth) 800 million pounds to 1 billion
pounds ($1.65 billion) could be a sensible amount," Graham
Jones, an analyst at Panmure Gordon & Co, said.
"Then they could do a (share) buyback to offset the earnings
dilution from a higher rental cost together with a special
Jones, however, cautioned the sale of some of Morrison's
property assets was "no magic wand" and the group's prospects
were still hampered by a poor competitive position.
Volume on Morrison's stock was nearly three times its
full-day average for the past three months, compared to around
40 percent of the average for the FTSE.