LONDON: Britain's top shares retreated on Wednesday, Aug 18 led by banks which were hit by nagging doubts on global economic recovery, while energy stocks and miners tracked weaker commodity prices. The FTSE 100 was down 35.85 points, or 0.7 percent, at 5,314.70 by 0813 GMT, after ending 1.4 percent higher on Tuesday at 5,350.55 for its highest close in a week.
Banking stocks were out of favour as worries about economic growth again saw investors retreat from cyclical stocks. HSBC was down 2 percent.
Markets have held in a fairly tight range over the last month, not moving far from the 5,300 level, with volumes thin as many investors are away for August.
"There's no clear trend and the market is fairly listless but under the surface lies a nagging concern that the Western economies are facing a Japan style scenario where they lost two decades," said Jeremy Batstone Carr, head of research at Charles Stanley.
Technical factors were also keeping the index moves fairly limited. Recent highs of around 5,410, and the 5,435 61.8 percent retracement of this year's down move from 5,833 to the lows at 4,790, are acting as resistance, said Michael Hewson, analyst at CMC Markets.
Mining stocks were under pressure, falling back after an advance on Tuesday as metal prices weakened as doubts about the demand outlook prevailed.
Highlighting these concerns, Eurasian Natural Resources shed 2.9 percent after the Kazakh miner said it was wary about commodity prices in the second half, when posting a 63 percent rise in first-half earnings on higher output and prices.
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M&A WATCH
BHP Billiton slipped 1.3 percent after launching a hostile $39 billion bid for fertiliser group Potash Corp.
The fall was in line with the MINING INDEX [], with some traders saying the limited move reflected scepticism about the deal.
Energy stocks were also on the back foot, as crude prices fell after an industry report signalled petroleum inventories in top consumer the United States were headed for a record.
BP, Royal Dutch Shell and Cairn Energy shed 0.8-1.3 percent.
Bank of England policymakers considered the case for both easing and tightening policy this month, before voting eight to one to keep interest rates at a record low of 0.5 percent, minutes showed on Wednesday.
This had little impact on the market but any indication that there might be a more imminent rate rise than was expected could have sent shares lower as a higher interest rate environment tends to dampen lending and growth.
Anglo American, British American Tobacco, Carnival, Fresnillo, Hammerson, HSBC, Pearson, Prudential and Standard Life fell after going ex-dividend.
A broker downgrade weighed on Diageo, off 1.2 percent, as HSBC cut its rating for the drinks firm to "neutral" from "overweight" and reduced its target price to 1,250 pence from 1,320 pence.
On the upside, Intertek rose 5.3 percent to be the top blue-chip riser, as tracker funds bought into the stock following news that the testing equipment company was to be added to MSCI Inc's World Stock Index.
The only U.S. data to be released on Wednesday will be weekly mortgage and refinancing indexes, due at 1100 GMT. - Reuters
Banking stocks were out of favour as worries about economic growth again saw investors retreat from cyclical stocks. HSBC was down 2 percent.
Markets have held in a fairly tight range over the last month, not moving far from the 5,300 level, with volumes thin as many investors are away for August.
"There's no clear trend and the market is fairly listless but under the surface lies a nagging concern that the Western economies are facing a Japan style scenario where they lost two decades," said Jeremy Batstone Carr, head of research at Charles Stanley.
Technical factors were also keeping the index moves fairly limited. Recent highs of around 5,410, and the 5,435 61.8 percent retracement of this year's down move from 5,833 to the lows at 4,790, are acting as resistance, said Michael Hewson, analyst at CMC Markets.
Mining stocks were under pressure, falling back after an advance on Tuesday as metal prices weakened as doubts about the demand outlook prevailed.
Highlighting these concerns, Eurasian Natural Resources shed 2.9 percent after the Kazakh miner said it was wary about commodity prices in the second half, when posting a 63 percent rise in first-half earnings on higher output and prices.
''
M&A WATCH
BHP Billiton slipped 1.3 percent after launching a hostile $39 billion bid for fertiliser group Potash Corp.
The fall was in line with the MINING INDEX [], with some traders saying the limited move reflected scepticism about the deal.
Energy stocks were also on the back foot, as crude prices fell after an industry report signalled petroleum inventories in top consumer the United States were headed for a record.
BP, Royal Dutch Shell and Cairn Energy shed 0.8-1.3 percent.
Bank of England policymakers considered the case for both easing and tightening policy this month, before voting eight to one to keep interest rates at a record low of 0.5 percent, minutes showed on Wednesday.
This had little impact on the market but any indication that there might be a more imminent rate rise than was expected could have sent shares lower as a higher interest rate environment tends to dampen lending and growth.
Anglo American, British American Tobacco, Carnival, Fresnillo, Hammerson, HSBC, Pearson, Prudential and Standard Life fell after going ex-dividend.
A broker downgrade weighed on Diageo, off 1.2 percent, as HSBC cut its rating for the drinks firm to "neutral" from "overweight" and reduced its target price to 1,250 pence from 1,320 pence.
On the upside, Intertek rose 5.3 percent to be the top blue-chip riser, as tracker funds bought into the stock following news that the testing equipment company was to be added to MSCI Inc's World Stock Index.
The only U.S. data to be released on Wednesday will be weekly mortgage and refinancing indexes, due at 1100 GMT. - Reuters
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