* FTSE 100 falls 2 pct, snaps 3-day winning streak
* Vodafone slips 15 pct to 20-week low after trading update
* Miners gain tracking higher metals prices
By Atul Prakash
LONDON, July 22 (Reuters) - Britain's top share index fell 2
percent by midday on Tuesday, with banking stocks slipping on
persistent concerns about tough economic outlook and heavyweight
Vodafone <VOD.L> slumping after a trading update.
By 1117 GMT, the commodity-heavy FTSE 100 <> was down
109.6 points at 5,294.7, after closing 0.5 percent higher on
Monday. The index, which rose in the previous three sessions,
has fallen nearly 18 percent this year.
Vodafone topped the FTSE 100 losers' list by slipping 15
percent to a 20 week low, shaving nearly 48 points off the
index, after it cut its revenue outlook as tougher economic
conditions forced consumers to hold back from buying and using
new handsets.
The company, the world's largest mobile phone firm by
revenue, said full-year revenue was expected to be around the
bottom of its previously stated range.
"A disappointing trading statement from Vodafone, which
although arguably offers a recession-proof service, does cast
doubts upon the near-term prospects of the telecom sector," said
Andrew Turnbull, director at Blue Index CFDs.
"Our clients have been advised to remain net short of the
market as the prospect of any lasting rally is unlikely,
considering the number of negative factors present in the
market," he said.
Banking shares fell again after recovering in the previous
session on initial reaction to results from Bank of America
<BAC.N>, as investors remained concerned about further
writedowns and the sector's ability to raise more capital.
The sector extended losses after U.S. bank Wachovia Corp
<WB.N> posted an $8.86 billion second-quarter loss and slashed
its dividend for a second time this year, hurt by a big goodwill
charge and an increase in reserves for bad loans as mortgage
defaults soar. []
NEGATIVE RATINGS ON BANKS
Fitch said it expected further negative rating actions on
global banks in the coming months, as the operating environment
remained tough and the global economy continued to slow.
Gerry Rawcliffe, managing director at Fitch's Financial
Institutions Group, said in a report that banks in developed
markets now faced the prospect of increased credit costs on top
of higher funding costs.
HBOS <HBOS.L> fell 2.7 percent after an emergency
fund-raising by the home lender flopped, leaving underwriters
with large amounts of stock. Royal Bank of Scotland <RBS.L>,
Barclays <BARC.L>, HSBC <HSBA.L>, Lloyds TSB <LLOY.L> and
Standard Chartered <STAN.L> fell between 2.3 and 6.2 percent.
"We had some reasonably reassuring comments from some of the
U.S. banks in recent days, but it's difficult to say that all of
the difficulties in relation to the credit market are behind
us," said Keith Bowman, analyst at Hargreaves Lansdown.
"I am sure we are going to be results-driven in the next few
days," he added.
But miners bucked the falling trend on higher metals prices.
BHP Billiton <BLT.L>, Anglo American <AAL.L>, Vedanta Resources
<VED.L>, Lonmin <LMI.L>, Xstrata <XTA.L> and Eurasian Natural
Resources <ENRC.L> rose between 0.4 and 1.5 percent.
Oils shares also gained, with BP <BP.L>, Royal Dutch Shell
<RDSa.L>, BG Group <BG.L>, Cairn Energy <CNE.L> and Tullow Oil
<TLW.L> all advanced between 1.3 and 8.2 percent.
Enterprise Inns <ETI.L> fell 14 percent, making it among the
top FTSE losers after Britain's second-biggest pubs group said
group earnings had come under pressure in the first 42 weeks of
its financial year due to a continuing fall in beer sales.
"We are less convinced than others about the resilience of
the business model, and view today's trading update as
downbeat," Lansbanki's Mark Reed said in a note. "Future growth
looks anaemic."
(Additional reporting by Dominic Lau; Editing by Quentin Bryar)
