* FTSE 100 index down 0.2 pct
* Oil stocks gain on record high crude prices
* Banks lose on worries over outlook, B&B slides
By Atul Prakash
LONDON, June 27 (Reuters) - Britain's blue-chip share index
was driven lower by banks and retailers by midday on Friday,
adding to the previous session's steep declines, but losses were
limited by robust oil shares that tracked record crude.
By 1128 GMT, the commodity-heavy FTSE 100 <> was down
9.0 points, or 0.16 percent, at 5,509.2 points, after slipping
2.6 percent to its lowest close since late March on Thursday.
It has fallen 15 percent this year.
Investors fretted about the financial sector, which was
worst hit by a credit market crisis that began last year.
Sentiment received a further blow as mid-cap Bradford &
Bingley <BB.L> tumbled 18 percent after entrepreneur Clive
Cowdery scrapped his plan to inject nearly $800 million into the
company, saying the lender's "entrenched" refusal to open its
books made a deal impossible.
"The market does remain very nervous. In the short-term,
there is a powerful mix of negativity," said Henk Potts, equity
strategist at Barclays Stockbrokers.
"You have got a nightmare oil price and runaway inflation,
which is eroding real wages and has the potential to further
reduce household demand," he added.
Energy stocks gained on the back of record high crude
prices, which have doubled in a year on supply disruptions and
geopolitical tensions in the Middle East. Rising flows of cash
into commodities from investors seeking to hedge against
inflation and the weak dollar have also added to gains.
Royal Dutch Shell <RDSa.L>, gas producer BG Group <BG.L>,
Cairn Energy <CNE.L> and Tullow Oil <TLW.L> added between 1.3
and 5 percent.
Miners also gained on firmer metals prices, with BHP
Billiton <BLT.L> up 0.6 percent and Eurasian Natural Resources
<ENRC.L> rising 2.3 percent.
Major world stocks fell to a three-month low on the back of
record high crude prices above $141 a barrel and a deteriorating
global inflation picture.
BANKS STRUGGLE
Shares in HBOS <HBOS.L> fell 1.6 percent to 273.45 pence and
below their 275 pence rights issue price on persisting concerns
about its exposure to a weak UK economy and housing market and
the threat that a big chunk of shares will not be taken up
during its rights issue.
Barclays <BARC.L> shed 2.3 percent and HSBC <HSBA.L> dropped
0.1 percent.
"Aside from the credit crunch, which has been with us for
some while now, the position of banks looks even more precarious
than it had been a short while ago," said Mike Lenhoff, chief
strategist at Brewin Dolphin.
"Their capacity to finance economic growth appears to be
diminishing by the day. So long as banks remain under pressure,
the markets are going to remain under pressure."
Food and drug retailers also slipped, with high prices
forcing consumers to cut their spending. Superstores struggled
to retain their market shares amid concerns that the economy was
slowing.
Britain's economy grew more slowly than previously thought
in the first quarter as the service sector recorded its weakest
performance in more than a decade, official figures showed.
The world's third-largest food retailer Tesco <TSCO.L> fell
1.7 percent, Britain's third-biggest supermarket group J
Sainsbury <SBRY.L> shed 2.4 percent and Britain's fourth-biggest
supermarket group Wm Morrison <MRW.L> lost 1.8 percent.
Investors will focus on U.S. core PCE data for May, due at
1230 GMT, and Reuters/University of Michigan consumer sentiment
data for June, due at 1355 GMT.
(Editing by David Cowell)
