* FTSE 100 down 1.1 percent, tech levels watched
* China data hurts miners
* Banks fall; Moody's downgrades Spain's rating
* BoE leaves rates flat
By Simon Falush
LONDON, March 10 (Reuters) - Britain's top share index fell
sharply on Thursday after a downgrade of Spain's credit rating
by Moody's further unsettled anxious investors, with high oil
prices and weak Chinese trade data also denting sentiment.
Technical factors paint a gloomy picture too, with the FTSE
100 <> falling below a key support level which suggests
more weakness is likely.
By 1222 GMT, the FTSE 100 <> was down 65.36 points, or
1.1 percent, at 5,871.94 having shed 0.6 percent on Wednesday.
It is down 2 percent on the week, on track for its worst such
show since last July.
It is below 5,881, the 38.2 percent Fibonacci retracement
from the Nov. 30 low to the late February high. The next key
retracement level -- 50 percent -- is at 5,812.
"If we close below the 5,881 level, it shifts the focus
towards the downside and further weakness in the FTSE for the
short term," said Michael Hewson, analyst at CMC
"The picture has shifted and we are having a good look at
levels around 5,800."
The Bank of England's Monetary Policy Committee kept
interest rates at a record low of 0.5 percent, but any residual
relief that rates did not rise was swept away by the stream of
negative news.
Though it has come off recent highs, Brent crude <LCOc1> was
trading above $114 on Thursday, as military activity intensified
in Libya, ramping up concerns about supply and maintaining
worries that the high price could hurt the demand outlook.
Miners were pressured as copper prices fell after weak
Chinese import data cast doubt on demand from the world's
biggest consumer of the metal, adding to worries about the
global economy.
Rio Tinto <RIO.L> shed 3.7 percent as it raised its offer
for Africa-focused coal miner Riversdale Mining <RIV.AX>
slightly to $3.9 billion in a final bid to woo key shareholders.
Moody's cut Spain's sovereign credit rating by a notch to
Aa2 and warned of further cuts, saying that the country's plans
to clean up the battered banking sector will cost more than the
government expects and add to its debt burden.
"The Spanish downgrade heightens worries especially in light
of the ECB's apparent hawkish stance on interest rates which
would add more pressure to Southern Europe," Mic Mills, head of
electronic trading at ETX Capital, said.
Banks <.FTNMX8350> were also a drag. Barclays <BARC.L>,
which has a big exposure to Iberian debt fell 2 percent.
Buyers came in for drugmakers, with GlaxoSmithKline <GSK.L>
the star FTSE 100 performer, up 1.3 percent, after U.S.
regulators approved Benlysta, the first new treatment for lupus
in 56 years and a potential $3 billion-a-year seller by 2015.
[]
The FTSE 100 has moved into negative territory for the year
but some analysts see the current weakness as an opportunity to
get into the market at relatively depressed levels.
"I still maintain the view that there's upside for UK
equities," said Peter Dixon, economist at Commerzbank.
"If you believe that the global economy story is still
intact despite the high oil prices, and if you believe that
other markets are going to go up as well, which I think we do
believe, I think the UK will be pulled along in that wake."
(Additional reporting by Tricia Wright)
