* FTSE 100 down 0.2 percent by midday trade
* House builders under pressure, Barratt down
* Retailers advance, Wm Morrison leads sector
By Atul Prakash
LONDON, May 16 Britain's top share index slipped
further away from a 14-year high on Friday, with homebuilders
falling on concerns that soaring house prices could prompt
authorities to introduce some cooling measures.
Barratt Developments, the country's biggest
housebuilder by volume, fell 5.3 percent to top the decliners'
list on the FTSE 100 index, while Persimmon was
down 3.6 percent.
"Investors are watching house prices, which have risen
quickly. The Bank of England is clearly monitoring the situation
and could take some action to stop the situation turning into a
bubble," Keith Bowman, analyst at Hargreaves Lansdown, said.
Britain's housing market has made a swift recovery from the
global financial crisis, with prices up about 10 percent in the
past 12 months.
Expectations are growing the central bank may try to prevent
a housing bubble by tightening standards for mortgage lending.
Speculation is rife that the BoE's Financial Policy Committee
will toughen lending rules when it meets on June 17.
Weaker house builders, along with a drop in mining shares on
growth concerns in countries such as China, dragged the FTSE 100
index lower from this week's 14-year high. The UK mining index
was down 1.8 percent, with investors switching to
The FTSE 100 index was down 0.2 percent at 6,826.41 points
by 1131 GMT, having dropped 0.6 percent in the previous session,
taking its cue from Wall Street which sold off after results
from Wal-Mart disappointed and as small-cap shares
extended their retreat.
The UK small cap index was down 0.7 percent, while
the mid-cap index fell 1.9 percent. Underperforming the
However, losses were capped by strong performance by
individual firms. Retailers, often seen as defensives, were up.
Wm Morrison rose 4 percent, followed by Sainsbury
, 2.3 percent firmer, and Tesco, up 2 percent.
Morrisons' advance was helped by mounting speculation that a
U.S.-led private equity consortium was weighing a bid for the
company, traders said, with the Daily Mail's market report
noting talk of a possible 6.4 billion pound ($10.8 billion), or
275 pence a share, cash offer. Morrisons declined to comment.
The sector built on gains seen in the previous session when
there was a strong bias towards defensive stocks, which often
lag when markets rise, supporting a view that the good times
will not roll for long.
Frothy valuations are stopping investors from putting more
money to work in equities. The FTSE 100 is trading on a 12-month
forward price/earnings ratio of 13.7 times, against its 10-year
average of 11.7 times, Thomson Reuters Datastream shows.
"The recent defensive rotation in equity markets underscores
our view that the wider risk-on rally now looks tired," Graham
Bishop, senior equity strategist at Exane BNP Paribas, said.
(Additonal Reporting by Tricia Wright; Editing by Toby Chopra)