UK FTSE falls 1 pct on weaker banks and oils

                                
 By Dominic Lau
                                
 LONDON, Jan 15 (Reuters) - Britain's FTSE 100 <.FTSE> index
fell 1 percent by midday on Tuesday as weaker crude prices
weighed on oil shares and after Citigroup <C.N> reported its
first quarterly loss.
                                
 The UK benchmark index briefly trimmed losses after the
Citigroup announcement. At 1157 GMT, the FTSE 100 was down 64.6
points at 6,151.1.
                                
 The FTSE 100 has lost 4.7 percent so far this year on
concerns over the possibility of the United States slipping into
recession. European shares were also weaker by mid-session.
                                
 "There is no doubt the recessionary fears have risen quite
sharply for both the U.S. and the UK since the start of the
year," said Roger Cursley, UK strategist at Investec.
                                
 "Our view is that we are not as bearish of the economy as
the market has become in recent weeks. We think a technical
recession will be avoided. But that said, there will be a lot of
pain to go through in terms of earnings downgrades."
                                
 Banks remained under pressure even though Citigroup
announced raising $14.5 billion from offerings of convertible
preferred securities. The U.S. bank posted its first quarterly
loss since its creation in 1998, hurt by write-downs for
exposure to subprime mortgages and other risky debt.
                                
 HSBC <HSBC.L> dropped 2.6 percent after Goldman Sachs added
the global banking group <0005.HK> to its Asia conviction sell
list.
                                
 Lloyds TSB <LLOY.L> eased 0.4 percent, Royal Bank of
Scotland <RBS.L> dipped 0.2 percent, Alliance & Leicester
<ALLL.L> fell 0.9 percent and Standard Chartered <STAN.L>
slipped 1 percent.
                                
 Northern Rock <NRK.L>, Britain's most prominent casualty of
the global credit market ructions, fell more than 14 percent.
The chairman of the embattled lender told shareholders that he
expects to announced the outcome of a review of the bank's
strategy by mid-February.
                                
 Oil shares also suffered as crude prices <CLc1> eased. BP
<BP.L> lost 2.2 percent and Royal Dutch Shell <RDSa.L> dropped
1.8 percent.
                                
 
                                
 TESCO DOWN
                                
 Tesco <TSCO.L> fell 2.4 percent after Britain's biggest
retailer missed analysts' expectations and reported a 3.1
percent rise in underlying sales at UK stores open more than a
year for the six weeks to Jan. 5. [ID:nL15607431]
                                
 But fellow supermarket group Sainsbury <SBRY.L> advanced 3.8
percent after Goldman upgraded its rating on the stock to "buy"
from "neutral" and added it to its conviction list.
                                
 Also in the retail sector, Debenhams <DEB.L> shed almost 6
percent despite the department stores group beating forecasts
with a 2.2 percent rise in like-for-like sales over the key
Christmas period. It said it expected trading conditions to
remain difficult. [ID:nL15606686]
                                
 Elsewhere in the sector, Marks & Spencer <MKS.L>, Next
<NXT.L>, Home Retail <HOME.L> and Kingfisher <KGF.L> also fell.
A JPMorgan downgrade also weighed on Kingfisher.
                                
 U.S. retail sales data, due at 1330 GMT, is also likely to
offer further direction for market players. Former U.S. Federal
Reserve Chairman Alan Greenspan said in an interview with the
Wall Street Journal that the U.S. economy is probably in
recession or about to slide into it.
                                
 British fashion house Burberry <BRBY.L> tumbled 12.2
percent. It said third-quarter sales were "modestly behind our
plan" meaning more stock was sold at a discount. [ID:nL15611307]
 (Additional reporting by Michael Taylor; Editing by Quentin
Bryar)