* FTSE 100 falls 1.9 pct
* Commodity stocks fall on weaker metal and crude prices
* Lingering credit worries hurt banks
* Liberty Int'l surges on stake build
By Dominic Lau
LONDON, Aug 26 (Reuters) - Britain's top share index slid
1.9 percent by midday on Tuesday as commodity stocks tracked
weaker metal and crude prices on concerns over global growth,
while lingering credit worries hurt banks.
By 1029 GMT, the FTSE 100 <> was down 102.5 points at
5,403.1, underperforming other major European indexes after the
UK market was closed for a holiday on Monday, when the other
benchmarks fell. The UK index had rallied 2.5 percent on Friday.
"It's a little discouraging but I suppose it's something we
have to expect in a way because we will be constantly shocked
with credit worries," said Mike Lenhoff, chief market strategist
at Brewin Dolphin.
"The banks have pretty well lost so much capacity to finance
economic growth...the whole question about progressing is a
little up in the air. At the same time, the central banks can't
do much about it because inflation has accelerated from targets.
The market is caught in a trap."
Lenhoff also said the corporate bond market had sensed there
would be trouble in the corporate sector with spreads widening.
"Against this kind of background, it's going to be difficult
for the equity market to make any progress," he added.
In the credit derivatives market, the investment-grade
Markit iTraxx Europe index <ITEEU5Y=GF> was at 101 basis points,
about 4 basis points wider versus late on Friday.
Energy stocks were the top-weighted loser on the index as
crude prices <CLc1> slipped below $114 a barrel. BP <BP.L>,
Royal Dutch Shell <RDSa.L>, gas producer BG Group <BG.L>, Cairn
Energy <CNE.L> and Tullow Oil <TLW.L> shed 2.5 to 3.7 percent.
Energy services company John Wood Group <WG.L> slipped 2.6
percent despite posting a 44 percent rise in first-half profit
and saying it expected to beat full-year expectations.
Miners also fell along with weaker metal prices. BHP
Billiton <BLT.L>, Anglo American <AAL.L>, Xstrata <XTA.L>,
Vedanta Resources <VED.L>, Kazakhmys <KAZ.L> Ferrexpo <FXPO.L>
and Antofagasta <ANTO.L> lost between 3 and 9.2 percent.
Rio Tinto <RIO.L> reported a 55 percent rise in first-half
earnings, boosted by its takeover of Alcan last year and record
iron ore production feeding Chinese demand. []
Rio shares were down 3.4 percent.
London Stock Exchange <LSE.L> sank 4.9 percent, making it
among the top losers on the FTSE 100, following increased
competition in the sector and general negative sentiment in the
finance industry.
PERSISTING CREDIT FEARS
Banks were another standout loser, with Barclays <BARC.L>,
Royal Bank of Scotland <RBS.L>, HBOS <HBOS.L>, Lloyds TSB
<LLOY.L> and Standard Chartered <STAN.L> down between 1.6 and
3.8 percent. HSBC <HSBA.L> headed north, up 0.3 percent.
U.S. stocks fell sharply overnight as credit concerns
hounded financial stocks while global growth worries hurt big
technology and industrial companies. In Asia, Japan's Nikkei
average <> lost 0.8 percent.
JPMorgan Chase <JPM.N> said the market value of its
investments in Fannie Mae <FNM.N> and Freddie Mac <FRE.N>
preferred stock has dropped by half to $600 million this
quarter. []
Data on U.S. new home sales for July and consumer confidence
for August, both due at 1400 GMT, will provide further clues to
the state of the world's largest economy.
Mid-cap Taylor Wimpey <TW.L>, however, soared 8.8 percent as
traders cited market talk that the housebuilder could have
reached a deal with its banks ahead of the firm's interim
results, due later this week. The debt-laden builder was not
immediately available for comment.
The rise in Taylor Wimpey shares boosted the housebuilding
sector, with Bovis Homes <BVS.L> reversing earlier losses and
trading up 2.1 percent despite reporting a slump in first-half
profit following what it called the toughest period of trading
in its life as a public company.
Liberty International <LII.L> surged 4.9 percent to top the
FTSE 100 gainers after U.S. real estate investor Simon Property
Group <SPG.N> raised its stake in Liberty to 4.22 percent,
fuelling speculation Simon was set to bid for Britain's biggest
shoppinga mall owner. []
Liberty announced details of Simon's new holdings in a
statement to the London Stock Exchange, shortly after
Australia's Westfield Group <WDC.AX> confirmed it had built a
2.96 percent stake in the UK firm.
(Editing by David Cowell)
