* FTSE down 0.1 percent
* JMAT knocked by Japan quake disruption
* Banks gain, brokers see upside to earnings
By David Brett
LONDON, March 22 (Reuters) - Engineers and firms with
exposure to Japan's car manufacturing sector dragged Britain's
top shares lower around midday on Tuesday, offsetting gains
energy stocks and banks.
Companies which make parts for cars, and those which sell
them, suffered, with retailer Inchcape <INCH.L> off 4.9 percent
and Johnson Matthey <JMAT.L> which makes catalytic converters,
falling 2.9 percent.
Toyota said that all 12 of its Japanese plants will stay
closed until at least Saturday.
"The auto industry lost 65 percent of car production in the
last two weeks," Atif Latif, director of trading at Guardian
stockbrokers said.
By 1142 GMT, the FTSE 100 <> was down 5.42 points, or
0.1 percent at 5,780.67, having closed higher for a third
straight session on Monday. The index is down around 3.5 percent
in March.
Engineers, which have echoed investor sentiment towards the
outlook for the global economy, continued their choppy trade of
the last few days.
GKN <GKN.L> was 3.1 percent lower. The firm was linked to a
potential bid for French aerospace equipment maker Latecoere
<LAEP.PA>, according to a report in a French newspaper.
[]
Ad group WPP <WPP.L> shed 1.2 percent as Exane BNP Paribas
cut its rating to "neutral".
Travel firm TUI Travel <TT.L> shed 2 percent after the
postponement of a decision to float Hapag-Lloyd AG [],
the container shipping group part-owned by TUI AG <TUIGn.DE>.
Proceeds from the float were to help expand TUI's tourism
business. []
BANKS GAIN
JP Morgan was upbeat on investment banks, saying Barclays
<BARC.L>, up 0.9 percent, was one of its preferred plays, adding
it expects the stock to trade between 290 pence and 340 pence,
"Due to limited capital and earnings at risk from
Japan, the recent fall in the prices of these stocks is an
excellent opportunity to buy equity gearing through investment
banks."
Royal Bank of Scotland <RBS.L> climbed 1.7 percent.
Philip Isherwood, equity strategist at Evolution securities
said European and UK earnings strength remains intact. He said
financials were among a number of sectors including basic
materials, industrials and technology, where earnings are all
still below long-term trend and are all strongly rising.
"The evidence of earnings failure is not apparent in the key
parts of the market that have been driving the earnings
recovery," he said.
Elsewhere, Cairn Energy <CNE.L> added 1.6 percent as it
raised expectations of Indian approval for the long-delayed sale
of a stake in its Indian business to Vedanta Resources <VED.L>,
as the UK oil explorer posted a return to profit in 2010.
Essar Energy <ESSR.L> rebounded 1.9 percent after sharp
falls post results on Monday.
Integrated oil <.FTNMX0530> were the top performing sector
as oil <LCOc1> remained near multi-year highs as Western
warplanes continued to hit targets in Libya. []
Accountancy software firm Sage <SGE.L> climbed 1 percent as
JP Morgan argued the sector was not at risk of supply chain
disruption from the earthquake in Japan and share price
reactions looked overdone.
Meanwhile, technical analysts warned the FTSE's recent spike
may not have too much further to go.
Enis Mehmet, an analyst at Autochartist, said short-term
investors might focus on the range of 6,045 to 5,505, which
creates a potential retracement target zone at 5,775 to 5,839.
(Editing by Elaine Hardcastle)
