March 15, 2013 / 12:15 PM / in 5 years

Royal Dutch Shell knocks Britain's FTSE off 5-year high

* FTSE 100 falls 0.5 percent

* Britain’s biggest company hit by analyst downgrade

* Index remains set for weekly gain

* IAG tops FTSE risers, up nearly 10 percent on the week

By Alistair Smout

LONDON, March 15 (Reuters) - Britain’s top share index fell on Friday, hit by an analyst downgrade to the country’s biggest company, but was set for a fifth straight weekly gain having set a fresh five-year high in the previous session.

Royal Dutch Shell was the top FTSE 100 faller, taking 10 points off the index, after JPMorgan cut its rating on the stock to “underweight” from “neutral”.

Shell has lost 6.1 percent since Jan 30., when the oil firm touched a six month high.

“Shell has been getting a bit of a kicking the last couple of days, and people have turned pretty bearish on the sector as a whole,” Yusuf Heusen, sales trader at IG Index, said.

“But the broader market is pretty much on hold this morning, and numbers out of the U.S. this afternoon might provide a boost for the market to drive higher.”

U.S. data including inflation and the Empire State Manufacturing Survey are released at 1230 GMT, and could impact UK markets, with FTSE 100 companies generating about a quarter of their revenues in the United States.

The FTSE 100 was down 34.48 points to 6,494.93 at 1129 GMT, easing back from the five-year high set in the previous session following better-than-expected U.S. weekly jobless claims data.

However, the index was set to post a weekly gain for the fifth consecutive time.

“The market is taking a little bit of a breather, and after the run we’ve had this week, you can’t imagine investors putting on major exposure to the upside,” Manoj Ladwa, head of trading at TJ Markets, said.

Banks were also weaker, dropping 1 percent, with traders citing the Federal Reserve’s comments to Goldman Sachs and JPMorgan that they must improve their capital plans as weighing on the sector in the UK.

However, while the energy and financial sectors combined to take 25 points off the index, several stocks benefited from more favourable analyst comment.

British Airways owner International Consolidated Airlines Group (IAG) firmed 3 percent as Morgan Stanley added the firm to its Europe best ideas list.

IAG has gained nearly ten percent this week as an industrial dispute at its Iberia operation draws to a close, and was the top FTSE gainer on Friday.

It has also been a good week for Aggreko. Thursday’s top blue-chip riser, following an unexpected deal to supply power to Mozambique and Namibia, extended gains, up 1.2 percent as Deutsche Bank lifted its rating on the stock to “buy”.

The bank, which raised its 2014 and 2015 earnings per share estimates by 3 percent and 7 percent to reflect the power deal along with slightly faster top-line growth, said its forecasts could prove conservative “given the headroom for share buybacks and acquisitions, as well as the potential to win sporting event contracts”. (Additional reporting by Tricia Wright; Editing by Mark Potter)

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