By Dominic Lau
LONDON, Feb 5 (Reuters) - Britain's top share index edged
down by midday on Tuesday as banks remained under pressure on
lingering concerns over credit markets, but a higher dividend
lifted shares in oil major BP <BP.L>.
At 1125 GMT, the FTSE 100 <> was down 35.7 points, or
0.6 percent at 5,990.5, slipping below the psychological 6,000
mark. The UK benchmark index lost 9 percent in January on fears
of a U.S. recession despite a 1.25 percent cut in interest rates
by the U.S. Federal Reserve.
"We are definitely in a wait-and-see mode with regard to the
UK interest rate decision on Thursday," said Martin Slaney, head
of derivatives at GFT Global Markets. "There's always something
around the corner that people need to keep their eye on."
Shares in the rest of Europe also traded lower by
mid-session.
Banks were the worst hit, shaving more than 21 points off
the FTSE 100, after a series of broker downgrades on U.S.
financial institutions fuelled worries over the outlook for the
world's biggest economy.
Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, HBOS
<HBOS.L>, HSBC <HSBA.L>, Standard Chartered <STAN.L>, Alliance &
Leicester <ALLL.L> and Lloyds TSB <LLOY.L> lost between 1.3 and
3.3 percent.
Miners were also hit after recent hefty gains, driven by
news of sector consolidation.
Rio Tinto <RIO.L> slipped 0.6 percent, while BHP Billiton
<BLT.L>, which has expressed an interest in Rio, was down 2.5
percent.
BHP, the world's biggest mining group, has to decide by
Wednesday whether it intends to make a formal offer for Rio or
walk away from its rival for at least six months.
Australian Prime Minister Kevin Rudd said China's move to
become the single largest shareholder in Rio, which has vast
resources in Australia, may warrant investigation under the
country's foreign ownership rules.
Kazakhmys <KAZ.L>, however, was up 0.5 percent. The miner
said it had bought the biggest power plant in Kazakhstan and a
nearby coal field for $1.5 billion.
BP SHINES
Oil shares offered some support, with BP up 2.3 percent to
top the gainers' list on the index as higher production, planned
job and cost cuts and a more generous dividend policy outweighed
a "disappointing" drop in fourth-quarter net profit.
[]
Royal Dutch Shell <RDSb.L> gained 1 percent, gas producer BG
Group <BG.L> added 1.3 percent and Cairn Energy <CNE.L> put on 2
percent. A price target hike from HSBC also boosted index
heavyweight Royal Dutch Shell.
Property counters were battered after HSBC downgraded its
rating on Hammerson <HMSO.L> and British Land <BLND.L>, and cut
its price target on SEGRO <SGRO.L>, Liberty International
<LII.L>, Brixton <BXTN.L>, Land Securities <LAND.L>.
Hammerson, British Land, Land Securities, SEGRO, Brixton and
Liberty International shed between 0.7 and 3.2 percent.
Also on the downside, Wm Morrison Supermarkets <MRW.L>
slipped 3.2 percent after Lehman Brothers downgraded its rating
to "equal weight" from "overweight" and Goldman Sachs cut its
price target on the grocer. Sainsbury <SBRY.L> dipped 1.9
percent.
Cadbury <CBRY.L> gained 1.3 percent after JPMorgan raised
its price target on the confectionery group.
(editing by Elizabeth Fullerton)
