* Banks weak, shed Wednesday's gain after Fed comments
* Miners, oils off; dollar strength hits commodity prices
* Rentokil Initial up ahead of FTSE 100 relegation
By David Brett
LONDON, Dec 17 (Reuters) - Britain's top share index was
down 0.9 percent in mid-session trade on Thursday, with banks
weighed down by comments from the U.S. Federal Reserve, and
retailers weaker after a surprise fall in UK November sales.
At 1157 GMT, the FTSE 100 <> was down 45.07 points at
5,275.19, having closed 34.49 points, or 0.7 percent, higher on
Wednesday at 5,320.26.
The index is up 52 percent from a six-year low in March,
though it is still 2.6 percent below its level in mid-September
2008 before the collapse of Lehman Brothers.
"The (retail sales) data out in the U.K. this morning
compounded sentiment following the Fed announcement last night,
handing investors the excuse to lock-in gains after yesterday's
rally," said Jimmy Yates, head of equities at CMC Markets.
Banks were lower after the U.S. central bank's policy-making
committee reminded markets it will let most of the special
liquidity facilities, which have helped bolster the U.S. banking
system since last year's credit crisis, expire by early next
year. []
HSBC <HSBA.L>, Barclays <BARC.L>, Lloyds Banking Group
<LLOY.L>, Royal Bank of Scotland <RBS.L> and Standard Chartered
<STAN.L> were off 1.6 to 4.4 percent, shedding the previous
session's gains.
Retailers were hit after British retail sales fell
unexpectedly in November.
Home improvements retailer Kingfisher <KGF.L>, electricals
retailers DSG International <DSGI.L> and Kesa Electricals
<KESA.L>, and clothing-to-foods group Marks & Spencer <MKS.L>
fell 0.5 to 3.0 percent.
Home Retail <HOME.L> was down 2.0 percent and was also
impacted by a downbeat note from Credit Suisse saying that
structural concerns and price falls at its Argos chain could
place pressure on gross profit margins.
Figures from the Office for National Statistics showed sales
dropped at their fastest pace since May after department stores
and clothing retailers failed to repeat October's strong sales.
[]
A report from the Confederation of British Industry added to
the gloom. It said British retail sales volumes maintained a
steady pace of growth in December, but firms are less optimistic
about the New Year when value added sales tax rises.
COMMODITIES PRESSURED
Weak energy and mining issues also weighed on the FTSE 100
as the dollar surged to three-month highs after the Federal
Reserve comments on the U.S. economy.
Miners were in reverse, having notched up good gains on
Wednesday as metals prices dropped, with gold <XAU=> falling 1
percent in European trade.
Antofagasta <ANTO.L>, Xstrata <XTA.L>, Lonmin <LMI.L>
Eurasian Natural Resources <ENRC.L> and Kazakhmys <KAZ.L> were
down 2.4 to 3.3 percent.
Rio Tinto <RIO.L> was down 2.1 percent and BHP Billiton
<BLT.L> fell 0.6 percent. China's steel industry association
said that every country should unite in opposition to a
"monopolistic" production joint venture between the two
Australian mining giants.
Energy stocks fell as crude <CLc1> dipped 0.7 percent, with
BG Group <BG.L>, BP <BP.L>, and Royal Dutch Shell <RDSa.L> down
0.2 to 1.5 percent.
Pharmaceutical stocks were also lower, with Shire <SHP.L> a
top blue-chip faller, off 1.7 percent, as UBS cut its rating on
the stock to "neutral" from "buy", mainly on valuation grounds.
GlaxoSmithKline <GSK.L> fell 0.6 percent.
On the upside, Rentokil Initial <RTO.L> was the top riser
ahead of its relegation from the FTSE 100 next week, up 3.6
percent, building on gains made Wednesday when Deutsche Bank
hiked its target price and estimates for the support services
group.
Britons' inflation expectations for the coming year held
steady at 2.4 percent in November, the same as August and May, a
quarterly survey from the Bank of England showed.
[]
(Editing by Sharon Lindores)
