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Britain's FTSE down on weak commods; retailers up

Published 09/15/2010, 07:00 AM
Updated 09/15/2010, 07:04 AM
GC
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* FTSE 1O0 index down 0.2 percent as commodities retreat

* Drugs weak; AstraZeneca hit by U.S. regulatory delay

* Retailers higher; Next up after results

By Jon Hopkins

LONDON, Sept 15 (Reuters) - Britain's top shares were weaker at midday on Wednesday, slipping back after recent strong gains as heavyweight commodity issues and banks retreated, although retailers found support following results from Next.

The FTSE 100 index was 11.39 points, or 0.2 percent, lower at 5,556.02 at 1043 GMT, having inched higher late on Tuesday to extend Monday's four-month closing peak.

"There is just a little drift back after the good gains seen in the past few weeks, with investors pausing for breath in the absence of much fresh news or data for direction," said Mic Mills, head of electronic trading at ETX Capital.

Weak energy issues were the main drag on blue chips, reflecting a fall in crude prices ahead of U.S. inventory data due later.

BP was the worst off, down 1.5 percent. British safety regulators last year criticised the oil company for failing to properly train North Sea staff in safety procedures, newspapers reported.

Miners also fell back, led by African Barrick Gold down 2.4 percent, with metal prices put under pressure by a jump in the dollar after Bank of Japan intervention to curb yen strength.

Elsewhere on the downside, AstraZeneca shed 1.3 percent after saying U.S. regulators had extended their review of the drugmaker's potential new blockbuster heart drug Brilinta by three months.

And peer GlaxoSmithKline lost 0.3 percent as Jefferies downgraded its stance to "hold" from "buy".

Banks were easier as a sector after gains in the past two sessions following a compromise deal on regulatory curbs in Basel III, with Barclays shedding 0.6 percent.

Inter-dealer broker Icap was also a big blue-chip faller, down 1.9 percent, as UBS cut its rating to "neutral".

But elsewhere within financials, insurers found support, benefiting from underlying strength in equity valuations and recent takeover chatter, according to traders, with Standard Life among the best off, up 1.9 percent.

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Fashion retailer Next led blue-chip gainers, up 4.9 percent after meeting forecasts with a 13 percent gain in first-half operating profit and keeping its full-year outlook unchanged.

Other retailers also benefited from Next's results, with Marks & Spencer and Kingfisher up 2.0 percent and 2.4 percent respectively, while supermarket groups Tesco and WM Morrison added 0.9 percent and 0.5 percent.

But peer Sainsbury missed out, losing 0.9 percent, as RBS cut its rating to "hold" from "buy" on valaution grounds.

On the second line, power station operator Drax Group fell 3.2 percent after both Goldman Sachs and JP Morgan cut their ratings on the stock.

And broker comment also weighed on JD Wetherspoon, off 3.1 percent, with JP Morgan cutting its rating and UBS reducing its target price for the pubs operator.

The number of Britons claiming unemployment benefit rose last month for the first time since January but there was a record rise in the number of people in work in the three months to July.

Analysts said the report was unlikely to alter policymakers' view that Britain's recovery from recession was fragile and will be vulnerable to deep public spending cuts due to be revealed next month.

The pound fell after the unemployment figures, which some analysts said could prove to be a turning point after the improvement seen in the first half of the year. (Editing by Dan Lalor)

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