By Michael Taylor
LONDON, Jan 23 (Reuters) - Britain's leading shares slipped
2.1 percent on Wednesday during a turbulent trading session and
as investors cast a beady eye over Bank of England (BoE) meeting
minutes for clues on future interest rate moves.
At 1152 GMT the FTSE 100 <> was down 119.0 points at
5,621.1 with market talk of further subprime write-downs and
surprise interest rate cuts, flying around trading rooms.
The index gained nearly 3 percent on Tuesday after the U.S.
Federal Reserve slashed its key interest rates by 75 basis
points to 3.5 percent.
Earlier in the session, minutes from the BoE's Monetary
Policy Committee showed eight members voted for no change in
rates at this month's meeting, while only one voted for a cut.
Late on Tuesday, BoE Governor Mervyn King appeared to pave
the way for a February interest rate cut in a speech in Bristol.
But he also warned price pressures might prevent any sharper
monetary easing beyond that. [].
ITV <ITV.L> was among the top FTSE 100 losers, down 5
percent after Bear Stearns issued a note saying the British
broadcaster faces some tough times ahead.
Oil stocks also weighed heavily on the UK market, with U.S.
crude <CLc1> below $88 a barrel on fears of a global economic
slowdown. BP <BP.L> shed 3.2 percent and rival Royal Dutch Shell
<RDSa.L> lost 3.5 percent after a series of price cuts from
brokerage Bernstein.
On the economic data front, UK gross domestic product grew
0.6 percent in the final three months of the year and at an
annual rate of 2.9 percent. Both rates were slower than the
third quarter but slightly faster than economists had
anticipated.
MORE TO COME?
"It's not absolutely certain that we've bottomed," said Dave
Evans, a market analyst at Betonmarkets. "For the next two days
I don't think we'll see as much severe selling as we've seen, so
perhaps we will stabilise."
"I'm leaning more towards there being a rally over the next
week, and if not a rally then at least some choppy trading, not
more severe selling. After that it's very murky and depends on
what the Fed decides."
U.S. stocks fell on Tuesday but the decline was less than
feared as the emergency rate cut by the U.S. Federal Reserve
helped stabilise global markets. All U.S. futures were down
<DJc1> <NDc1> <SPc1>, stoked by recession fears.
Miners also dragged, with base metal prices falling.
Vedanta Resources <VED.L> was 6.8 percent lower after
Zambia's largest copper producer, Konkola Copper Mines (KCM),
majority-owned by the London-listed company, suspended
operations due to flooding caused by recurring power outages.
See []
But shares in Xstrata <XTA.L> rose as much as 5 percent
before tracking back to trade 0.7 percent higher, on market talk
of a 4,000 pence-per-share bid for the miner by the end of the
week, traders said. Xstrata declined comment.
Trading remained very cautious however, after Britain's main
share index lost 5.5 percent on Monday, its largest daily loss
since Sept. 11, 2001, wiping nearly 77 billion pounds off the
value of the index's constituent stocks.
The FTSE 100 has lost more than 12 percent so far this year
on concerns over the health of the U.S. economy.
On the upside, general retailers bucked the trend in a
falling market, buoyed by hopes of a BoE rate cut and after
Lehman Brothers upgraded the sector to "positive" from
"neutral", traders said.
Next <NXT.L> tacked on 3.2 percent and Kingfisher <KGF.L>
added 1.4 percent.
In the banking sector, which dipped in and out of positive
waters during the session, HSBC <HSBA.L> climbed 2.3 percent
after ABN AMRO raised its rating to "hold" from "buy".
(Additional reporting by Dominic Lau, Rebekah Curtis and Raissa
Kasolowsky, editing by Elizabeth Fullerton)
