By Dominic Lau
LONDON, Jan 9 (Reuters) - Britain's top share index slid 1.1
percent by midday on Wednesday as Marks & Spencer <MKS.L>
plunged after its worst quarterly performance in two years and
fears of a recession in the United States hit sentiment.
At 1045 GMT, the FTSE 100 <> was down 68 points at
6,288.0 after advancing 0.3 percent in the previous session.
European shares also traded lower by mid-session. U.S.
benchmark indexes tumbled between 1.8 and 2.4 percent on Tuesday
after a warning by phone company AT&T <T.N> of soft consumer
spending sparked a new round of recession fears.
"Given the way things are going, why should the MPC (the
Bank of England's Monetary Policy Committee) wait? It takes so
long for interest rate changes to have an impact," said Mike
Lenhoff, chief strategist at Brewin Dolphin.
The Bank of England starts its two-day monetary policy
meeting on Wednesday, and investors expect the central bank to
leave rates unchanged at 5.5 percent on Thursday, according to a
Reuters poll.
"Why not get a start sooner rather than later when the
economy needs it? Clearly, from the retail side of things, it
does look as if things are certainly not getting better anytime
soon."
Marks & Spencer, a bellwether for British retailers, sent
the sector into a tailspin after it reported its worst quarterly
performance in two years, adding to signs of a slowdown in
British consumer spending. []
Separately, a survey showed consumer confidence in Britain
fell for a third month running in December. []
Marks & Spencer slumped more than 17 percent. Elsewhere in
the sector, Tesco <TSCO.L> lost 4.1 percent, Sainsbury <SBRY.L>
shed 4.7 percent, Next <NXT.L> dropped 4.3 percent, Home Retail
<HOME.L> fell 4.6 percent and Kingfisher <KGF.L> slipped 3.1
percent.
Oil shares were the biggest losing sector, shaving 22 points
off the index. BP <BP.L> fell 4 percent on market rumours the
oil major was guiding analysts to reduce their earnings
forecasts for the fourth quarter of 2007. BP denied the rumours.
Royal Dutch Shell <RDSa.L> dipped 0.1 percent and Tullow Oil
<TLW.L> lost 4 percent.
GROWTH WORRIES
Banks, which have been clobbered by a global credit market
turmoil in recent months, were also among the worst hit.
Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, HBOS
<HBOS.L>, Lloyds TSB <LLOY.L> and Standard Chartered <STAN.L>
were down between 1 and 3.2 percent.
Persimmon <PSN.L> shed 4.8 percent after it posted a 14
percent fall in forward sales and a 4 percent drop in home
completions, overshadowing its guidance that profits and margins
had improved and would be within market expectations.
Taylor Wimpey <TW.L> was down 6.3 percent while Barratt
Developments <BDEV.L> lost 6.6 percent.
Vodafone <VOD.L> dropped 2.3 percent and BT Group <BT.L>
lost 2.2 percent after U.S. heavyweight AT&T fuelled concerns
that telecoms operators were no longer defensive stocks destined
to ride economic weakness.
Miners, however, were mixed despite firmer metal prices.
Lonmin <LMI.L> advanced 2.2 percent, and Kazakhmys <KAZ.L>
tacked on 0.4 percent.
Anglo American <AAL.L> eased 0.4 percent, while BHP Billiton
<BLT.L> dipped 0.7 percent and Rio Tinto <RIO.L> slipped 1.2
percent.
Defensive stocks like pharmaceuticals, utilities and tobacco
shares, also rose. British American Tobacco <BATS.L> advanced
1.8 percent while AstraZeneca <AZN.L> gained 2.2 percent and
National Grid <NG.L> added 0.8 percent.
(Additional reporting by Ana Nicolaci da Costa; Editing by Paul
Bolding)
