February 11, 2008 / 12:47 PM / 12 years ago

FTSE dips as banks and growth worries weigh

LONDON, Feb 11 (Reuters) - Britain’s top share index eased on Monday, as downbeat brokerage notes and a grim outlook from the Group of Seven finance leaders over the weekend prompted investors to take profits on banks, and some miners also fell.

At 1204 GMT, the FTSE 100 index .FTSE was 0.6 percent lower at 5,751.0 points, as data showed British factory gate inflation rose more than expected in January. The index gained more than 1 percent on Friday.

Banks were the worst performers on the index. The Group of Seven finance leaders meeting in Tokyo over the weekend issued a warning over the impact of the credit market turmoil on the global economy but did not unveil joint plans to boost growth.

Adding to the pressure, HSBC cut its price targets on Barclays (BARC.L), Lloyds TSB (LLOY.L), HBOS HBOS.L and British buy-to-let mortgage bank Bradford & Bingley BB.L, and their shares fell more than 1 percent.

Alliance & Leicester ALLL.L, also grappling with a price target cut, was down 4.6 percent.

“We seem to be trapped in this credit crisis. We thought that we had passed over the worst, and yet the daily information is more and more losses are coming to light,” said Edward Menashy an economist at Charles Stanley.

“The UK is not going to be satisfied until the domestic commercial banks come up with their finance figures at the end of this month. We hope they are going to be straightforward and absolutely clean with the extent of the losses they’ve incurred.”

Bradford & Bingley, Nordea NDA.ST, KBC (KBC.BR) and UBS UBSN.VX are among European banks reporting this week.

Other interest-rate sensitive sectors including homebuilders also fell after Goldman Sachs revised its outlook on the sector.

Persimmon (PSN.L) dropped 2.8 percent after a downgrade from Goldman Sachs, while Taylor Wimpey (TW.L) and Barratt Developments (BDEV.L) shed 3.7 percent after Goldman added them to its conviction sell list.

Miners were the second biggest weight on the index, after the world’s largest platinum producer Anglo Platinum (AMSJ.J) posted weaker full-year headline earnings per share.

Angloplat, a majority of which is owned by Anglo American (AAL.L), also posted a lower output versus a year ago and forecast even lower production for 2008.

Anglo American was down 1.7 percent, Rio Tinto (RIO.L) and BHP Billiton BLT.L fell as much as 2 percent and Xstrata XTA.L shed 1.3 percent.

But Kazakhmys (KAZ.L) gained 2.7 percent along with a rise in the price of copper MCU3=LX and Lonmin LMI.L rallied 1.5 percent as platinum XPT= hit a record high.

Smiths Group (SMIN.L) fell 2 percent after the engineer said overall profit and sales in the first half of its financial year would meet expectations, but strength in its detection and speciality engineering businesses offset a flat performance in medical.


In a sign that investors remain worried about the prospects for the world economy, European credit spread indexes stuck near record highs reached on Friday. The G7 pledged action for restoring markets to financial health but stayed clear of any joint plans.

Data on Monday showed British factory gate inflation rose to its highest rate in more than 16 years, making it more difficult for the Bank of England to cut interest rates as fast as some market participants would hope.

The BoE cut rates last week by a quarter of a percentage point but policymakers remained worried about inflation.

Heavyweight oil stocks cushioned losses, as oil prices held above $91 a barrel. BP (BP.L) rose 0.4 percent and Royal Dutch Shell (RDSa.L) gained 1 percent.

GlaxoSmithKline (GSK.L) rose 2.4 percent making it among the biggest percentage gainers after UBS upgraded the stock to “buy” from “neutral”. (Additional reporting by Michael Taylor and Dominic Lau; editing by Sue Thomas)

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