RTRS: FTSE down 0.9 pct at midday as commods decline
By Joanne Frearson
LONDON, Dec 22 (Reuters) - Britain's FTSE 100 .FTSE index fell at midday on Monday, with commodity stocks leading the losers as the Chinese rate cut failed to excite the sector and worries about the extent of the global slowdown weighed. At 1130 GMT, the FTSE 100 index was down 37.38 points, or 0.9 percent at 4,249.55. The UK blue chip index closed down 1 percent on Friday.
"The market is on the downside today. I think the negative news from Toyota (7203.T: Quote, Profile, Research, Stock Buzz) has tested confidence, this is the second profit warning from the group and highlights the weakness in the U.S. and Europe," Keith Bowman, analyst at Hargreaves Lansdown, said.
"If a manufacturer like Toyota is seeing difficulties it does not read particularly well for the rest."
Meanwhile, two key members of the Bank of England's Monetary Policy Committee said monetary policy alone cannot help the economy avoid some of the worst consequences of the global credit crunch. [ID:nLM559877]
Sterling hit a record low on a trade-weighted basis due to ongoing worries that UK interest rates will have to fall much more to help a struggling economy.
Miners took the most points off the index as China's central bank cut banks' lending and deposit rates by 0.27 percentage points, the fifth cut since mid-September.
"There is nothing to get excited about, the interest rate cut in China today has done little to help the miners. It is only 27 basis points and is unlikely to do much," said Rob Griffiths, strategist at Cazenove
Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) fell 1.1 percent after it said it is in the process of shutting down all it iron ore mines in Australia's Pilbara region for two weeks to cut production by 10 percent by year-end in the face of declining demand from steel mills. [ID:nSYD223356]
Energy stocks were in also the doldrums as crude CLc1 traded at around $42 a barrel. BG Group (BG.L: Quote, Profile, Research, Stock Buzz), BP (BP.L: Quote, Profile, Research, Stock Buzz) and Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) were down 1-3.7 percent.
Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) retreated from earlier rises to trade 2.5 percent lower. The group initially gained after Cairn India (CAIL.BO: Quote, Profile, Research, Stock Buzz) said it had made an oil and gas discovery near its existing field in the western Indian state of Rajasthan. [ID:nBMA002046]
BANKS RETREAT FROM EARLIER GAINS
Banks retreated from earlier gains, although HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) was up 0.8 percent, snapping a seven-session losing run.
Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) lost 2.8 percent. Its Chief Executive John Varley told BBC television that bank lending will take 1-2 years to return to normal, and asset prices need as much as 18 months to stabilise. [ID:nLK213212]
The group is also considering selling its private equity arm to a management consortium in a move to raise capital for the bank, the Mail on Sunday newspaper reported. [ID:nLL414806]
Retailers fell, following a recent strong run, amid mixed signals in the last few days before Christmas as analysts pointed to the downside of their cutting prices to boost their top lines.
John Lewis [JLP.UL], the employee-owned group, said sales picked up during the last weekend before Christmas, the most important time of year for the sector, but were still down on a year ago.
Marks & Spencer (MKS.L: Quote, Profile, Research, Stock Buzz) shed 4.9 percent, Home Retail (HOME.L: Quote, Profile, Research, Stock Buzz) sank 11 percent, Next (NXT.L: Quote, Profile, Research, Stock Buzz) lost 2.1 percent and Kingfisher (KGF.L: Quote, Profile, Research, Stock Buzz) sagged 3.8 percent.
