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Weak banks lead Britain's FTSE lower

Published 12/15/2010, 11:54 AM
Updated 12/15/2010, 11:56 AM
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* FTSE 100 index sheds 0.2 percent

* Banks weak; Moody's says may cut Spain's rating

* Capital Shopping up on indicative Simon Group bid

By Jon Hopkins

LONDON, Dec 15 (Reuters) - Britain's leading share index slipped back on Wednesday, snapping a four-session winning streak, with banks the worst performers as investors' risk appetite waned on fresh eurozone debt concerns.

The FTSE 100 ended down 9.03 points, or 0.2 percent at 5,882.18, having finished at its highest close for 30 months on Tuesday after putting on 1.7 percent since Dec. 9.

"It looks like it wants to go higher into the year-end ... but it's tricky with the big fourth-quarter futures and options expiries happening tomorrow," said David Morrison, market strategist at GFT Global.

"There is also some fairly significant resistance on the FTSE coming up around 5,930 and that might provide a bit of a barrier, so we just need to be a bit wary around that level."

Banks were the main drag on blue chips, with Barclays the top FTSE 100 faller, down 3.7 percent as worries resurfaced over euro zone debt worries.

Moody's put Spain's Aa1 rating under review, citing concerns about its mounting debt and 2011 funding needs, though it said it did not expect Madrid to need an EU bailout.

A cautious statement from the U.S Federal Reserve on the economic outlook Tuesday night also knocked investor sentiment.

U.S. blue chips, however, were up 0.3 percent by London's close, helped by in-line U.S. inflation data and a stronger than expected manufacturing report from the New York Fed, although the broader S&P 500 index was lower.

On the domestic data front, the number of Britons out of work rose for the first time in six months in the three months to October.

NOT SO PRECIOUS

Among commodity plays, silver miner Fresnillo fell 2.5 percent, while gold miner Randgold Resources lost 2.0 percent as the prices of precious metals retreated under pressure from a firmer dollar.

Integrated oils were weak as a sector, although the crude price managed a slight rally with BG Group, down 1.3 percent, and Royal Dutch Shell off 0.4 percent.

BP, however, bucked the trend, as speculation of corporate action kept the stock higher, up 0.7 percent. After vague talk of a possible bid from Royal Dutch Shell on Tuesday, traders noted rumours BP was seeking to raise capital from investors in the Middle East to help fend off any takeover.

Capital Shopping Centres was the top FTSE 100 riser, up 4.9 percent as Simon Property made a 425 pence per share indicative offer valuing the British mall owner at about 3 billion pounds.

Rexam gained 3.8 percent, taking its advance for the week up to nearly 5 percent, as traders cited hopes for a disposal of the consumer packaging firm's Closures unit.

A report in Plastics News, posted on its website this week, said according to several sources Rexam is considering selling the business, which makes lids and tops for beverage, food, and household containers.

Vague takeover chatter also resurfaced around software blue chip Autonomy Corp, up 4.8 percent. (Editing by David Holmes)

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