* Mining, commodity stocks pressured by low commodity prices
* Insurers hit by funding concerns, Aviva sinks 21 percent
* Rate decisions from BoE, ECB keenly awaited
By Martina Fuchs
LONDON, March 5 (Reuters) - Britain's FTSE 100 <> fell
1.7 percent by midday on Thursday, dented by insurance and
mining stocks as investor nerves resurfaced ahead of rate
decisions from the Bank of England and European Central Bank.
At 1053 GMT the FTSE 100 index <> was 60.69 points
lower at 3,585.18 after closing 3.8 percent higher on Wednesday
when it rose after three sessions of sharp falls.
The FTSE 100 index is down over 19 percent so far this year,
after tumbling more than 31 percent in 2008.
The BoE's Monetary Policy Committee is widely expected to
cut bank rates by 50 basis points to 0.5 percent at noon,
although the main focus will be on details of an expected
quantitative easing move.
"What people are looking for is details about quantitative
easing. The market wants some clarity," said Robin Evans,
analyst at Fox-Pitt, Kelton.
"In the short term quantitative easing will not have a lot
of effect. It takes some time for monetary policy to work. In
the short term the market will respond positively over some
clarity what the Bank of England intends, but in practical terms
it will take time to work through the system," Evans said.
The European Central Bank will deliver its interest rate
decision at 1245 GMT when it is expected to cut Europe's key
interest rate by 0.5 percentage point to 1.5 percent.
COMMODITIES WEIGH
Commodities came under pressure again, as China's Premier
Wen Jiabao said China expects to achieve 8 percent economic
growth this year but failed to unveil a hoped for new economic
stimulus package. []
Miners took most points off the index, with Antofagasta
<ANTO.L>, Xstrata <XTA.L>, BHP Billiton <BLT.L> and Anglo
American <AAL.L> falling 3.7-7.4 percent.
Kazakhmys <KAZ.L> lost 6.3 percent after it posted a 30
percent fall in 2008 core profits from its own operations and
said it would not pay a final dividend.
Rio Tinto <RIO.L> was down 3.9 percent, after the Bank of
China <3988.HK>, China's biggest foreign exchange lender, said
it would consider loans to back Chinalco's $19.5 billion
investment in the company. []
Heavyweight oil and gas producers were also under pressure
as crude prices slipped below $45 per barrel <CLc1>. Energy
majors Royal Dutch Shell <RDSa.L>, BP <BP.L> and BG Group <BG.L>
fell 0.7-2.1 percent.
Insurers and other financial services stocks were also down,
retreating from sharp gains the previous session as concerns on
the state of the frail banking system and frozen credit market
resurfaced.
Aviva <AV.L> was the heaviest blue-chip loser, plummeting 21
percent as investors were unimpressed by a full-year profit
which broadly met forecasts and after the insurer said it would
pay a dividend. []
"People are concerned they can't afford the dividend that
they've decided to pay," said MF Global analyst Peter Eliot.
Analysts also cited concerns over new provisions and
writedowns announced by Aviva, including an 8 percent writedown
against the value of its corporate portfolio.
Other insurers were also hit hard as concerns on funding hit
the wider sector. Friends Provident <FP.L>, Old Mutual <OML.L>
and Legal & General fell 9.9-12.8 percent.
Prudential <PRU.L> fell 9.3 percent after American
International Group <AIG.N> said it had suspended talks with
bidders for its foreign life unit, for which Prudential had made
a preliminary offer.
Defensive stocks like pharmaceuticals and tobacco companies,
which tend to perform relatively well in falling markets, added
most points to the index. GlaxoSmithKline <GSK.L> rose 1.5
percent while British & American Tobacco <BATS.L> gained 1.2
percent.
Cobham gained 1.5 percent after the defence electronics firm
said its full-year underlying pretax profit climbed 18 percent,
slightly ahead of forecasts [].
British house prices fell 2.3 percent in February and by a
record 17.7 percent year-on-year, taking average prices back to
levels last seen in August 2004, mortgage lender Halifax said in
its monthly survey.
(Additional reporting by Miles Neligan, Editing by Dan Lalor)
