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Weak energy stocks drag Britain's FTSE lower

Published 10/04/2010, 04:28 AM
Updated 10/04/2010, 04:32 AM

* FTSE 100 off 0.5 percent

* Oils, miners retreat after previous session's gains

* Investors await Friday's U.S. September jobs report

By Tricia Wright

LONDON, Oct 4 (Reuters) - Britain's top share index fell early on Monday, led down by weak energy stocks, which retreated after strong gains in the previous session, as investors awaited economic releases later in the week.

By 0811 GMT, the FTSE 100 was off 28.41 points, or 0.5 percent, at 5,564.49, after closing up 44.28 points, or 0.8 percent, at 5,592.90 on Friday.

Energy stocks were out of favour as the crude price slipped, while miners were also on the back foot, reversing Friday's gains, as metals prices dropped.

Inmarsat shed 2.3 percent after the Sunday Times reported that U.S. hedge fund Harbinger Capital is planning to sell a 10 percent stake in British satellite firm Inmarsat worth close to 300 million pounds ($475 million).

"Interest is probably going to pick up later in the week. We've got Bank of England and ECB interest rate decisions, and obviously the monthly unemployment data from the States on Friday," said Richard Hunter, head of UK equities at Hargreaves Lansdown.

It was a mixed picture among the banks. Royal Bank of Scotland shed 0.3 percent. The part-state owned bank has emerged as the bank with the most to lose in the event that economic laggard Ireland cannot repay its debts, the Daily Mail said.

Many British banks may need another state bailout next year and their borrowing requirements could hit 25 billion pounds a month, the New Economics Foundation thinktank said.

WOLSELEY FIRM

Wolseley grabbed the top spot on the blue-chip leader board, up 1.3 percent, as Credit Suisse started coverage on the building supplies firm with an "outperform" rating and a 1,855 pence price target, offering 17 percent potential upside from Friday's closing share price.

On the second tier, Premier Foods was the biggest gainer, adding 11 percent, after Britain's biggest food producer said on Sunday it received approaches that could lead to the sale of its meat-free business, including the Quorn brand.

September's UK construction services PMI report will be released at 0828 GMT on Monday.

Across the Atlantic, U.S. August factory goods, durable goods revisions and pending home sales data are all due at 1400 GMT on Monday. Investors' main focus, however, will be on Friday's U.S. September jobs report.

The Federal Reserve must not launch a new round of asset purchases without setting out what it wants to achieve through the policy, the Financial Times quoted Philadelphia Fed President Charles Plosser as saying.

Meanwhile, the former deputy governor of the Bank of England, John Gieve, on Monday shrugged off suggestions that the economy was heading for a Japanese-style slump and urged the central bank not to print more money. (Editing by Sharon Lindores)

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