*Food producers down after UBS downgrades Unilever, Cadbury
*Barclays gains on fundraising plan
*Miners up, supported by firmer metal prices
By Simon Falush
LONDON, June 16 (Reuters) - Britain's blue-chip share index
<> ticked down by midday on Monday, as sharp falls in
telecoms stocks and food producers cancelled out gains in mining
stocks and Barclays <BARC.L>.
Index heavyweight Vodafone <VOD.L> shed 1.5 percent as
traders said investors switched out of the relatively safe
telecoms sector. Fixed-line operator BT Group <BT.L> was down
1.7 percent.
By 1122 GMT, the FTSE 100 was down 15 points, or 0.26
percent, at 5,787.8, after losing 1.8 percent last week.
Food producers also took a beating after UBS downgraded
Unilever <ULVR.L> and peer Cadbury <CBRY.L> to "sell", saying
the sector's premium valuation was susceptible to any
disappointment.
Unilever was down 3.8 percent and Cadbury was down 1.9
percent, while Associated British Foods <ABF.L> eased 0.7
percent.
Mining shares tracked higher metal prices and were supported
by broker upgrades and persistent merger speculation linking
Anglo American <AAL.L> to a merger with Brazilian rival Vale
<VALE5.SA>.
Anlgo American rose 3.5 percent, while Eurasian Natural
Resources <ENRC.L> gained 5.2 percent after a rating upgrade to
"buy" from "hold" from ABN AMRO and Kazakhmys <KAZ.L> added 2.2
percent.
"The view in terms of commodities being well supported
should be a strong driver for the mining sector," said Henk
Potts, an equity strategist at Barclays Stockbrokers.
Barclays, Britain's third-biggest bank, led UK financials
higher, gaining 6.5 percent after it said it planned to raise
funds by selling shares to new and existing shareholders.
Investors lauded the fund-raising plan from Barclays, though
the bank declined to comment on weekend newspaper reports that
it was close to raising 4 billion pounds ($7.8 billion) from
sovereign wealth funds in a deal that would be completed in the
next two weeks.
Lloyds TSB <LLOY.L> surrendered early gains, down 0.8
percent, after The Sunday Telegraph said the UK bank was in
early stages of considering a takeover bid for Germany's
Deutsche Postbank <DPBGn.DE>.
Gainers in the banking sector included Alliance & Leicester
<ALLL.L> and HBOS <HBOS.L>, rising 2.9 and 0.7 percent,
respectively.
The Bank of England said conditions in the money markets
remained "stressed", with banks reluctant to lend to each other
for longer than a month, the Daily Telegraph said.
Investors will also look for further clues on the health of
U.S. investment banks in the wake of a global credit crisis.
Lehman Brothers will report its quarterly results later Monday,
followed by Goldman Sachs on Tuesday and Morgan Stanley on
Wednesday.
BUILDERS RECOVER
Mid-caps Barratt Developments <BDEV.L> surged 11.5 percent
and Taylor Wimpey <TW.L> rose 8.5 percent after the Sunday
Telegraph said a group of Britain's biggest institutional
investors were working on plans drawn up by bankers at UBS to
provide direct funding to shore up the battered housebuilding
sector.
Peer Persimmon <PSN.L> advanced 4.6 percent.
Britain's economy will slow to its weakest growth rate in
almost two decades next year, hit by rising oil and food prices
and by feeble consumer demand, the country's leading employers'
group said.
British Airways <BAY.L> shed nearly 4 percent after Goldman
Sachs cut its price target on the stock.
GlaxoSmithKline added 0.8 percent after it said the U.S.
Food and Drug Administration had approved Requip XL, a
Parkinson's disease drug <GSK.L>.
(Editing by Erica Billingham)
