Europe debt concerns hit banks as FTSE falls

                                
 * FTSE down 0.8 pct, Europe uncertainty triggers bank falls
                                
 * Miners sag as tax fears resurface
                                
 * Invensys gains on bid talk
                                
 
                                
 By David Brett
                                
 LONDON, Sept 7 (Reuters) - Britain's top shares dropped on
Tuesday, paring gains over the previous seven sessions, with
banks falling on European debt worries and miners hit as the
threat of a punitive tax in Australia resurfaced.
                                
 By 1045 GMT, the FTSE 100 <.FTSE> was down 43.82 points, or
0.8 percent, at 5,395.37.
                                
 The index had gained almost 6.5 percent over the previous
seven days to reach its highest close since April 30, as robust
economic data from the U.S. dampened double-dip recession fears
and low volumes accentuated moves.
                                
 Banks <.FTNMX8350>, however, retreated after the Wall Street
Journal said Europe's recent "stress tests" of major banks
understated some lenders' holdings of potentially risky
government debt.
                                
 Barclays <BARC.L> fell 3.1 percent as the bank appointed Bob
Diamond, the head of its investment and wealth management
business Barclays Capital, as its new group chief executive to
replace John Varley next year. [ID:nLDE68600E]
                                
 "The banking sector has fallen in value today through
uncertainty," David Buik, senior partner at BGC Partners said.
                                
 "The sooner it is accepted that agreeing globally on bank
regulation and taxation is a non-starter, the better for all
concerned. The indecision in Brussels is what is making everyone
so nervous - not Bob Diamond."
                                
 British hedge fund firm Man Group <EMG.L> fell 4.4 percent,
topping the fallers list, as investors retreated following
recent sharp moves higher.
                                
 
                                
 MINERS PROVE TAXING
                                
 London-listed miners <.FTNMX1770> slipped 1.7 percent, with
traders saying the formation of Australia's Labor minority
government, supported by independent and Green MPs, will see
iron ore and coal miners hit by a new resource tax.
                                
 With Prime Minister Julia Gillard retaining power, a new 30
percent tax is likely to go ahead, although there is uncertainty
over how much they will have to pay. [ID:nSGE68608L]
                                
 Elsewhere, Cable & Wireless Worldwide <CWP.L>, which gained
over 10 percent last week, shed 3.1 percent as hopes that it
might be the subject of a bid from Singapore Telecommunications
<STEL.SI> were deflated by a Citigroup note.
                                
 The broker said the Singapore company wanted to focus on the
Asia-Pacific region.
                                
 On the upside, defensively-perceived utility stocks were
good gainers, with Severn Trent <SVT.L> and United Utilities
Group <UU.L> up 1.7 and 0.5 percent respectively, boosted as
Citigroup hiked its target prices for the water firms.
                                
 Invensys <ISYS.L>, which is tipped to fall out of the FTSE
100 following this week's reshuffle, added 4.6 percent and
topped the blue chip <.FTSE> risers list, with traders citing a
newspaper report that the company is a takeover target.
[ID:nLDE6860FQ]
                                
 Tullow Oil <TLW.L> rose 2.7 percent extending the previous
session's gains, with traders citing speculation in the press on
bid rumours from ExxonMobil <XOM.N> and China Offshore Oil
Corporation. [ID:nLDE6860KP]
                                
 British Airways <BAY.L> climbed 1.5 percent as UBS released
a bullish note on the stock in which it raises its price target,
saying that synergies from its merger with Iberia will drive
performance.
 (Editing by Sharon Lindores)