* Banks top the decliners list, Fed decision awaited
* Miners slip, tracking lower metal prices
* Debenhams surges on trading update
By Atul Prakash
LONDON, June 24 (Reuters) - Britain's blue-chip index fell
1.3 percent by midday on Tuesday as banking stocks slipped ahead
of a rate decision by the U.S. Federal Reserve on Wednesday and
political tension between Israel and Iran weighed on the market.
By 1119 GMT the commodity-heavy FTSE 100 <> was down
73.7 points at 5,593.5, after rising 0.8 percent on Monday.
The market extended early losses on rumours of a strike on
Iran's nuclear sites. The denial of the rumour by a senior
Iranian nuclear official had little market impact. Last Friday
the New York Times quoted U.S. officials as saying Israel had
carried out exercises which could be a rehearsal for a strike on
Iran.
Investors remained cautious ahead of a U.S. Federal Reserve
statement on Wednesday that could shed light on the timing of
possible interest rate increases.
"Investor confidence seems to be drifting lower with
practically every sector in the UK being sold off, perhaps in
preparation for this week's main event the Fed's interest rate
meeting," Sam Goult, a trader at CMC Markets, said in a note.
Banks were the top losers on the FTSE 100 index, with
Standard Chartered <STAN.L> falling 3.1 percent, Royal Bank of
Scotland <RBS.L> declining nearly 1 percent and Lloyds TSB
<LLOY.L> dropping 1.2 percent.
HSBC <HSBA.L> fell 1.1 percent after traders referred to
market rumours that the British bank could make a bid for the
world's largest wealth manager UBS <UBSN.VX>.[]
But Bradford & Bingley <BB.L> soared nearly 15 percent after
restructuring specialist Resolution said it planned to
consolidate some of Britain's smaller banks and had been invited
by investors in Bradford to consider using it to spearhead the
plan. []
Bradford rejected the investment approach, saying it would
have meant Resolution taking effective control of the lender.
Bradford shares were last up 10 percent.
Analysts said the market outlook remained dull.
"We are now realising that the build up of inflationary
pressures presents major issues on all non-oil producing
economies, not just the major western group," said Roger
Cursley, UK strategist at Investec.
"And I don't think this is really being reflected in stocks
market pricing so far this year, as most of the pressure had
been around the credit crisis or domestic consumer demand in the
UK and the U.S. It's suggestive of a very difficult second half
of the year."
MINERS SUFFER
Miners slipped, tracking weaker metal prices. BHP Billiton
<BLT.L>, Xstrata <XTA.L>, Anglo American <AAL.L> and Vedanta
Resources <VED.L> fell between 0.7 and 3.7 percent.
But Antofagasta <ANTO.L> gained 0.6 percent after Credit
Suisse upgraded the stock to "outperform" from "neutral" and
raised its price target to 760 pence from 600 pence.
Oil shares also tracked a broader decline in the market
despite a rise in crude prices. BP <BP.L>, Royal Dutch Shell
<RDSa.L> and Cairn Energy <CNE.L> all dipped between 0.4 and 1.8
percent.
British gas producer BG Group <BG.L> fell 1.9 percent after
it launched a hostile $13.1 billion bid for Australia's Origin
Energy <ORG.AX>, as it sought to boost its position in
Asia-Pacific's fast-growing gas market. []
Retailers suffered, with Britain's biggest retailer Tesco
<TSCO.L>, J Sainsbury <SBRY.L> and Britain's fourth biggest
supermarket group, Wm Morrison <MRW.L>, all falling between 1.7
and 2.9 percent.
But Debenhams <DEB.L> jumped as much as 16 percent after the
department stores group said like-for-like sales rose a
stronger-than-expected 1 percent in the last 10 weeks and its
net debt would be in line with analysts' current expectations.
But stocks pared gains and were last up 0.6 percent.
Advertising group WPP <WPP.L> said like-for-like revenues
rose 4.5 percent and forecasts were in line with full year
margin target. [] Shares were down 2.3 percent.
(Additional reporting by Simon Falush; editing by Ian Jones)
