* North Korea missile launches worries investors
* Energy stocks slip as crude price falls
* Banks fall; defensive tobaccos, supermarkets rise
By Simon Falush
LONDON, May 26 (Reuters) - Britain's FTSE 100 <> was
down 1.5 percent by midday on Tuesday, with reports that North
Korea had launched missiles unnerving markets, hitting
risk-sensitive banks and denting oil and metal prices and
commodity stocks.
By 1046 GMT the FTSE 100 <> was down 64.56 points at
4,300.73 in thin trading after gaining 0.5 percent on Friday.
The index is down 3 percent this year, but has gained over 24
percent since touching a six-year trough on March 9.
North Korea, criticised for its latest nuclear test, fired
two more short-range missiles off its east coast on Tuesday and
accused the United States of plotting against its government.
[]
This news, combined with an OPEC oil producers' meeting
later in the week which is expected to keep output unchanged,
pushed the price of crude oil down nearly $2 to below $60 per
barrel, hitting energy stocks.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L>,
Tullow Oil <TLW.L> and Cairn Energy <CNE.L> fell between 0.7 and
3.9 percent.
Miners slid, tracking weaker metal prices. Anglo American
<AAL.L>, Lonmin <LMI.L>, Rio Tinto <RIO.L> and Xstrata <XTA.L>
fell 2.9-3.6 percent.
"Energy and commodity stocks ... are vulnerable to a pull-
back, particularly if the outlook for world economic growth is
being questioned again," said Paul Kavanagh, equities analyst at
Killik & Co.
BANKS SLIDE
Banks, which also tend to suffer as risk aversion increases,
were also broadly weaker with Barclays <BARC.L> and Lloyds
Banking Group <LLOY.L> down 2.5 and 5.3 percent respectively
despite upgrades from Oriel.
Standard Chartered lost 3.6 percent, and HSBC <HSBA.L> fell
2.6 percent. Oriel cut HSBC to "add" from "buy".
On the domestic front, retiring Bank of England policymaker
David Blanchflower said he feared his colleagues could quash any
economic recovery by tightening monetary policy too soon, in
comments reported in the Sunday Telegraph. The London market was
closed on Monday for a public holiday. []
No important UK economic data is due for release on Tuesday,
leaving investors to focus on U.S. indicators for any evidence
that might point to economic recovery, notably key consumer
confidence data at 1500 GMT.
"It will have an impact if that number does come in lower
than anticipated," Kavanagh said. "I don't think people will
necessarily buy a strong consumer confidence number today."
Cable & Wireless <CW.L> was down 0.9 percent after Credit
Suisse cut it to "underperform" from "neutral".
Pennon Group <PNN.L> and midcap Northumbrian Water <NWG.L>
were down 2.8 and 2 percent respectively after Banc of
America-Merrill Lynch downgraded both to "underperform" from
"neutral" on valuation grounds.
Rexam <REX.L>, the world's largest beverage can maker added
0.1 percent after Goldman Sachs added it to its 'conviction buy'
list and raised it to a "buy" from "neutral" on valuation
grounds.
Defensive tobacco stocks British American Tobacco <BATS.L>
and Imperial Tobacco <IMT.L> were also in positive territory as
investors looked to assets perceived as safe havens.
Supermarkets also fared well with Tesco <TSCO.L>, WM
Morrison <MRW.L> and Sainsbury <SBRY.L> up by between 0.5 and
1.1 percent.
(Additional reporting by Catherine Bosley; Editing by Greg
Mahlich)
