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FTSE hit by Ireland, China concerns, banks down

Published 11/19/2010, 11:52 AM
Updated 11/19/2010, 11:56 AM

* FTSE down 0.6 percent, second week of losses

* Banks waiting for Ireland debt clarity

* Commodities weak as China ups reserve requirements

By David Brett

LONDON, Nov 19 (Reuters) - Britain's top share index fell on Friday, led by banks and commodity-linked stocks on worries over Ireland's debt crisis and concern over future growth in China after it increased its banks' reserve requirements.

The FTSE 100 closed down 35.88 points, or 0.6 percent, at 5,732.83. The index finished the week down 1.1 percent, having falen 1.3 percent last week.

Banks fell, led by Standard Chartered down 2.7 percent, as investors awaited clarification on Ireland's debt problems.

Meanwhile, energy and mining stocks were bruised, along with commodities, after China said it would raise banks' reserve requirements by 50 basis points, effective Nov. 29, the second time in two weeks.

A European Union and International Monetary Fund aid plan for Ireland was likely to come next week together with, or very shortly after, the release of Dublin's four-year austerity scheme, EU sources said on Friday.

"Although Ireland's central bank may now be engaging in the required dialogue to rescue the nation's finances, traders seem exceptionally wary of the path ahead," Anthony Grech, head of research at IG Index, said.

Elsewhere, traders said the worry was that China could take more stringent measures to add to increased reserve requirements to keep inflation in check, including a drastic rise in interest rates.

India-focused miner Vedanta Resources, down 0.5 percent, agreed a $6 billion financing deal with a consortium of banks to help fund its proposed acquisition of a majority stake in the Indian unit of Cairn Energy.

SAGE DROPS

Accountancy software company Sage shed 3.1 percent, with traders citing a readacross from U.S. peer Intuit which reported disappointing results.

Outsourcer Capita extended its decline from Thursday when it issued a trading update. It was down 1.9 percent, the heaviest faller among blue chips, after an HSBC downgrade to "underweight".

On the upside, software company Autonomy added 1.2 percent, with traders citing its analyst day on Nov. 29 as a potential catalyst and with sentiment surrounding the technology sector lifted by earnings-beating results from U.S. computer maker Dell .

Chipmaker Arm Holdings was the top riser up 3.9 percent.

Elsewhere, Man Group rallied 3.8 percent, having suffered sharp falls earlier in the week after traders said its flagship AHL fund was having a tough week.

The intraday low of 5,684.49 was just above significant support for the index at 5,682, a 50-day moving average the index bounced off on Wednesday, said Michael Hewson, markets analyst at CMC Markets. (Editing by Dan Lalor)

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