* FTSE 100 down 0.8 pct
* Banks fall, tracking weakness in U.S. financials
* Munich Re warning, Hannover outlook weigh on insurers
* Firmer crude prices lift energy stocks
By Dominic Lau
LONDON, July 25 (Reuters) - Britain's blue-chip index fell
by midday on Friday, as a profit warning from Munich Re
<MUVGn.DE> weighed on insurers, while banks tracked lower U.S.
financials on concerns about their health after weak housing
data.
By 1033 GMT, the FTSE 100 <> was down 42 points, or 0.8
percent at 5,320.6, after losing 1.6 percent on Thursday.
Banks were the biggest drag on the index after U.S.
financial companies, which have incurred huge losses from the
housing slump, slid overnight after data showed June sales of
existing homes hit a 10-year low. The U.S. banks stocks index
<.BKX> fell 6.7 percent after rising about 40 percent over the
past week.
Royal Bank of Scotland <RBS.L>, Barclays <BARC.L>, HSBC
<HSBA.L>, Standard Chartered <STAN.L> and Lloyds TSB <LLOY.L>
were down between 2.5 and 4.5 percent.
Insurers were also standout losers after Munich Re issued a
profit warning, blaming turbulent equity markets, and Hannover
Re <HNRGn.DE> said it would be difficult to reach full-year
targets if capital markets did not calm down.
Aviva <AV.L>, Prudential <PRU.L>, Standard Life <SL.L>, RSA
Insurance <RSA.L>, Old Mutual <OML.L>, Friends Provident <FP.L>
and Legal & General <LGEN.L> lost 2.5 to 6 percent.
"The FTSE 100 is dropping, the European stocks are falling
back because insurers are coming out with pretty bad news," a
trader said.
Munich Re slumped 14 percent and Hannover dropped 4.4
percent.
Marks & Spencer <MKS.L> fell 5.8 percent following soft
weekly sales data from rival John Lewis, which runs department
stores and upmarket grocer Waitrose.
Within the retail sector, Next <NXT.L>, Tesco <TSCO.L>,
Kingfisher <KGF.L> and Carphone Warehouse <CPW.L> were off 1.5
to 5.4 percent.
British economic growth slowed as expected in the second
quarter of this year to its weakest rate in three years as
private housebuilding slumped, official data showed.
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ENERGY SUPPORTS
Energy stocks, however, lent some support as crude prices
<CLc1> firmed. BP <BP.L>, Royal Dutch Shell <RDSa.L>, gas
producer BG Group <BG.L> and Tullow Oil <TLW.L> put on between
1.5 and 3.4 percent.
Miners were also firmer, with BHP Billiton <BLT.L>, Rio
Tinto <RIO.L>, Xstrata <XTA.L>, Ferrexpo <FXPO.L> and Anglo
American <AAL.L> up 0.1 to 1.6 percent.
GlaxoSmithKline <GSK.L> added 0.7 percent after HSBC raised
its price target on the stock, while AstraZeneca <AZN.L> put on
1.4 percent ahead of its first-half results next Thursday.
"We've had a ridiculous rally in the banks (in recent
sessions) from a very low level which was right because when
you've had over a year of writing off debt, you must be
somewhere near the bottom," said David Buik, a strategist at
BGC Partners.
(Additinal reporting by Michael Taylor; editing by Sue Thomas)
