By Dominic Lau
LONDON, Feb 20 (Reuters) - Britain's leading share index
fell 1.2 percent by mid-session on Wednesday as Vodafone <VOD.L>
slipped on a possible price war in the U.S. and Alliance &
Leicester <ALLL.L> tumbled after warning on margins.
Index heavyweight Vodafone shed 3.5 percent after its joint
venture in the United States, Verizon Wireless, said it had
started offering flat-rate plans for unlimited calls, raising
investor concerns that a price war could break out.
At 1122 GMT, the FTSE 100 <> was down 74.2 points at
5,892.7 points, after advancing 3.1 percent in the past two
sessions.
"We didn't get off to a good start. Wall Street was turned
in backward late in the session due to elevated oil prices. That
was compounded by an effective profit warning from Alliance &
Leicester," said Keith Bowman, an analyst at Hargreaves
Lansdown.
"The market is likely to remain volatile ... Add to that, in
the background we've still got the outcome of talks of monoline
insurers taking place."
Banks were among the worst hit, after Alliance & Leicester
suffered a double blow from the impact of financial market
turmoil, warning of sharply higher funding costs and revealing a
big writedown on the value of risky assets. []
Alliance & Leicester fell 8.4 percent, while HBOS <HBOS.L>,
Bradford & Bingley <BB.L>, Lloyds TSB <LLOY.L>, HSBC <HSBA.L>
and Standard Chartered <STAN.L> lost between 1.3 and 2.2
percent.
But Barclays <BARC.L>, Britain's third-biggest bank, rose
1.2 percent as traders said investors were switching out from
Alliance & Leicester.
"Alliance & Leicester figures are pretty appalling. People
see the sector's safest stock is Barclays, because their figures
were clearly in the opposite way from Alliance & Leicester. A
lot of switching is going on," a trader said.
The market was also troubled by news that KKR Financial
Holdings <KFN.N> had deferred repayment of debt due on Feb. 15.
The listed affiliate of private equity group Kohlberg Kravis
Roberts [] said in a filing with the U.S. Securities and
Exchange Commission that the maturity date on the debt had been
extended to March 3.
Investors will be able to assess how U.S. inflation is
developing when consumer prices data is released at 1330 GMT.
SLIPPERY OILS
Oil shares fell as crude prices <CLc1> retreated after
climbing nearly 5 percent to a record above $100 a barrel a day
ago.
Both Royal Dutch Shell <RDSa.L> and gas producer BG Group
<BG.L> lost 1.2 percent. BP <BP.L> dropped 1.7 percent after
going ex-dividend.
Miners were mixed, with Xstrata <XTA.L>, Kazakhmys <KAZ.L>
and Lonmin <LMI.L> up. Anglo American <AAL.L> was flat after it
posted a 6 percent rise in full-year profit, in line with
forecasts, and said a global credit crisis would delay the
disposal of its road surface business Tarmac.
BHP Billiton <BLT.L> and Rio Tinto <RIO.L> were down between
2.1 and 1.9 percent, respectively. Rio also traded without
dividend rights.
Rexam <REX.L> added 4.3 percent after the world's biggest
maker of drinks cans said it met forecasts with a 7 percent fall
in underlying annual profit and it expected to return to profit
growth in 2008.
Drugmaker Shire <SHP.L> advanced 4 percent ahead of its
results on Thursday. On the other hand, Carnival <CCL.L> and
Scottish & Southern Energy <SSE.L> fell after it, too, went
ex-dividend.
(Editing by Will Waterman)
