* FTSE set for 4th day of losses, led by commodities, banks
* U.S. Alcoa results raise concerns over earnings season
* Handful of defensives higher
By Dominic Lau
LONDON, April 8 (Reuters) - Britain's leading share index
was down 0.8 pct by midday on Wednesday as commodity stocks and
banks fell on concerns over corporate earnings while a handful
of defensive issues offered some support.
By 1035 GMT, the FTSE 100 <> was down 29.71 points at
3,900.81, after falling 1.6 percent on Wednesday for the third
straight session loss.
The UK index has fallen 12 percent so far this year after
tumbling more than 31 percent in 2008.
Miners languished on softer base metal prices and after U.S.
aluminium group Alcoa <AA.N> reported a second consecutive
quarterly loss on falling demand and sharply lower prices,
raising concerns about corporate earnings as the reporting
season kicks off.
Xstrata <XTA.L>, BHP Billiton <BLT.L>, Kazakhmys <KAZ.L>,
Antofagasta <ANTO.L>, Vedanta Resources <VED.L>, Fresnillo
<FRES.L> and Anglo American <AAL.L> were down 1.4 to 4.4
percent.
Graham Secker, UK equity strategist at Morgan Stanley, said
the risk/reward argument for buying equities was not strong.
"The reason to sell is that the market has gone up a lot and
we are entering into uncertainty around reporting season, a U.S.
bank stress test," he said.
"The boost to the market from recent policy commentary may
well fade. The (bear market) rally may go on for a little longer
but fundamentally you want to sell into it."
Oil producers took most points off the index as crude prices
<CLc1> slipped below $48 a barrel. BP <BP.L>, Royal Dutch Shell
<RDSa.L>, BG Group <BG.L>, Tullow Oil <TLW.L> and Cairn Energy
<CNE.L> shed 1.7 to 4.6 percent.
BG Group also traded ex-dividend.
"Market moves fit with our view that a cautious stance to
risk-taking remains appropriate, and that, outside of emerging
markets, we would advise against overweighting equities,"
Barclays Wealth said in a note.
DATA STILL BAD
Data showed Britain's economic outlook remained glum. The
National Institute of Economic and Social Research said the UK
economy probably shrank by 1.5 percent in the first three months
of the year, after a 1.6 percent dip in the final quarter of
2008.
A Nationwide survey revealed British consumer confidence
slipped in March as people fretted about rising job losses and a
deepening recession.
"This recession is likely to be the deepest and most
prolonged since the Depression years," ING said in a note.
"Risks remain to the downside, but stimulus efforts are
intensifying and there are tentative signs of improvement in
some data."
Banks were mixed, with Barclays <BARC.L>, Royal Bank of
Scotland <RBS.L> and Standard Chartered <STAN.L> up 1.6 to 2.2
percent. But HSBC <HSBA.L> and Lloyds Banking Group <LLOY.L>
dropped 2.5 and 0.3 percent, respectively.
Man Group <EMG.L> sagged 2.8 percent. The hedge fund group
said the net asset value of its main AHL fund had fallen 2.3
percent last week.
Diageo <DGE.L> dropped 2.1 percent after UBS cut its price
target on the drinks group and kept a "sell" rating.
Capita Group <CPI.L>, Pearson <PSON.L> and Prudential
<PRU.L> also fell after going ex-dividend.
Compass Group <CPG.L> put on 2 percent after Morgan Stanley
upgraded the caterer to "overweight" from "equal weight" and
raised its price target.
Defensive food retailers, cigarette makers, mobile telecoms
and healthcare firms were also in demand. Tesco <TSCO.L>,
Vodafone <VOD.L>, Imperial Tobacco <IMT.L>, Smith & Nephew
<SN.L> and GlaxoSmithKline <GSK.L> rose 0.9 to 7.2 percent.
Vodafone was also boosted by a Deutsche Bank recommendation
to investors to switch from Telefonica <TEF.MC> to the UK mobile
operator.
