* Stores fall after weak May UK retail sales data
* Oils, miners down as commodity prices dip
* Banks lower, led down by HSBC
By Jon Hopkins
LONDON, June 18 (Reuters) - Britain's leading share index
was down 0.8 percent at midday on Thursday, weighed on by falls
in oils, miners, and banks, with weak retail sales numbers
hitting store owners.
By 1059 GMT, the FTSE 100 <> index was 35.83 points
lower at 4,242.63, having closed down 50.11 points, or 1.2
percent in the previous session.
"Trading has lacked energy this week, with summer holidays
and the end of the quarter approaching there is a fear that
investors will start to shut up shop and walk away," said Joshua
Raymond, Market Strategist at City Index.
Retailers featured among the biggest FTSE 100 fallers, with
Home Retail Group <HOME.L> shedding 2.4 percent, while Next
<NXT.L>, Marks & Spencer <MKS.L>, and Kingfisher <KGF.L> shed
between 1.2 and 2.3 percent.
British retail sales fell unexpectedly in May as shoppers
tightened their belts after splashing out over the Easter
holidays, while government borrowing hit a record high, official
data showed on Thursday.
The Office for National Statistics said retail sales volumes
fell 0.6 percent on the month, against a forecast of a 0.4
percent gain. That left them 1.6 percent lower than in the same
month a year ago.
Sterling fell to a one-week low against the euro on the data
<EURGBP=> while gilt futures rallied as investors tempered some
of their recent optimism over Britain's economic outlook.
Adding to the negative tone for the outlook on the economy,
British factory orders fell slightly more than expected in June
as export orders had their biggest drop in more than a decade,
the Confederation of British Industry said. []
Weak energy shares were the biggest drag amongst the blue
chips as oil prices <CLc1> held below the $72 per barrel level,
with BP <BP.L> Royal Dutch Shell <RDSa.L> and BG Group <BG.L>
losing 0.4 to 1.8 percent.
Miners saw some early gains reversed as metal prices
remained weak amid demand concerns.
Rio Tinto <RIO.L> was the worst off, down 3.2 percent
reflecting its recent rights issues, while Vedanta Resources
<VED.L>, Antofagasta <ANTO.L>, and Kazakhmys <KA.L> lost 1.4 to
2.2 percent.
Xstrata <XTA.L>, however, held firm, up 1.2 percent
supported by two broker upgrades. Morgan Stanley raised its
rating for the miner to "overweight" from "equal-weight", while
Citigroup upped its stance to "buy" from "hold".
BANKS MIXED
Among the banks, part-nationalised Lloyds Banking Group
<LLOY.L> gained 3 percent, reflecting index re-weighting
factors, while Royal Bank of Scotland <RBS.L> gained 0.8 percent
and Standard Chartered <STAN.L> added 2.2 percent.
But overall the sector was lower, with Barclays <BARC.L>
down 1.9 percent and heavyweight HSBC <HSBA.L> off 1.4 percent.
The largest shareholder in HSBC, Legal & General Investment
Management, has offered for the first time public support for
activist investor Eric Knight and urged the bank to answer
questions he has raised over the bank's strategy. []
U.S. stock futures <.DJc2> pointed to opening falls in New
York on Thursday after a mixed showing, with banks in focus
after the U.S. government's extensive proposals for regulatory
reform were unveiled by President Barack Obama on Wednesday.
[]
Defensive stocks were in favour, with mobile telecoms group
Vodafone <VOD.L> in demand, up 2.1 percent, while British
American Tobacco <BATS.L> and Imperial Tobacco <IMT.L> gained
1.7 and 1.3 percent respectively.
BAE Systems <BAES.L> saw good support, up 1.5 percent after
UK newspaper the Daily Mail said that Saudi Arabia was
considering placing an order for a further 72 Typhoon jets worth
about 5 billion pounds ($8.20 billion).
Aircraft engine producer Rolls-Royce <RR.L> benefitted as
well, adding 1.1 percent.
(Editing by Greg Mahlich)
