* FTSE up 0.1 pct, investor panic eases over Japan
* Banks fall, impacted by Portugal downgrade, HSBC ex-div
* Commodities rally, seen as benefitting from Japan rebuild
By David Brett
LONDON, March 15 Weakness in banks after
Portugal's credit rating was cut hampered a recovery on
Britain's top share index on Tuesday, offsetting commodity stock
gains as the previous session's Japan-related sell-off subsided.
Banks .FTNMX8350 took 12 points off the index after
Moody's overnight cut Portugal's sovereign debt rating by two
notches and said further downgrades are possible.
"Recent focus has been on the Middle East and Japan. The
downgrade reminds us the Europe's debt problems linger," Jimmy
Yates, head of equities at CMC Markets, said.
HSBC (HSBA.L), down 2.5 percent, heaped pressure on the
sector after going ex-dividend, while insurer Standard Life
(SL.L) and UK REIT Land Securities (LAND.L) also fell after
losing their dividend attractions.
The FTSE 100 .FTSE was up 5.16 points at 5,700.44, having
ended down for a fifth consecutive session on Tuesday when
panicky investors wiped nearly 21 billion pounds ($33.86
billion) off the market in response to the economic threat posed
by the aftermath of Japan's devastating earthquake and tsunami.
Hakan Friesen, head of economic research at SEB, says there
will be short-term effects on financial markets and economy from
Japan, and that nuclear problems pose a big risk.
Friersen sees further downside potential on equities in
Japan of 10 percent, and in the United States and Europe of 5
percent, but back to pre-crisis levels in 3 to 6 months.
He expected: "upward pressure on oil prices in a medium time
perspective" and "bond yields further down in the short run, but
return to pre crisis level in line with equities."
Technical analysts also warned of near-term risks to the
"Given the near-term range of 5,859.00 to 5,591.59,
aggressive counter-trend traders should watch for a possible
short-covering rally to 5,718.44 to 5,748.38. Bearish traders
may re-emerge in this zone to pressure the market lower," James
A. Hyerczyk, analyst at Autochartist, said.
InterContinental Hotels (IHG.L) fell 1.6 percent after the
company announced a change in ceif executive.
With the FTSE off around 5 percent in March alone, led
chiefly by falls in commodity assets, investors took the
opportunity to hunt for bargains.
"The sell-off is presenting some solid buying opportunities
for the longer term investor, although with repeated bouts of
panic selling also hitting the market, the outlook remains
choppy," a trader said.
Mining .FTNMX1770 and energy .FTNMX0530 stocks rose in
tandem with commodities as traders said they expected strong
demand for base metals and oil once the full impact of the
earthquake in Japan is known.
Elsewhere Associated British Foods (ABF.L) added 3.7
percent, after Credit Suisse lifted its rating on the food and
retailing group to "outperform" from "neutral", citing the
benefits of high sugar prices.
Investors will watch UK employment data at 0930 GMT for more
evidence on how the domestic economy is faring.
(Editing by Hans Peters)