* FTSE 100 down 0.8 percent
* Banks, miners retreat
* M&A speculation, activity lifts BG Group, Dana
By Simon Falush
LONDON, Aug 20 (Reuters) - Britain's top share index fell by
midday on Friday as persistent doubts about the durability of
economic recovery weighed on banks and miners.
By 1057 GMT the FTSE 100 <> was down 41.08 points or
0.8 percent at 5,170.21 after it ended 1.7 percent lower on
Thursday, its lowest close since July 20.
Banks, which tend to track moves in risk appetite fairly
closely, slipped as data showing new U.S. jobless claims scaled
a nine-month high last week added to market jitters.
[]
Barclays <BARC.L> and Royal Bank of Scotland <RBS.L> were
both down around 1.4 percent.
Building supplies group Wolseley <WOS.L>, which has a large
proportion of its revenues from the United States, was among the
top fallers, down 3.9 percent.
"There's more of a sell-off after the negative data from the
U.S., investors are being cagey," said Will Hedden, sales trader
at IG Index.
Options expiries also weighed on the index.
"We had options expiry between 10 and 10:30. The market held
fairly well around the 5,200 level, and that's where all the
open interest was for the options, so it was most likely it was
going to gravitate towards that level," said Manoj Ladwa, senior
trader at ETX Capital.
Energy and mining stocks were also mostly lower, dragged
down by commodity prices.
Eurasian Natural Resources <ENRC.L> was the top blue-chip
faller, down 3.8 percent after Citigroup cut the stock to "hold"
from "buy" on valuation grounds.
BP <BP.L> fell 1.5 percent. It likely won't put the final
plug in its blown-out Gulf of Mexico oil well until September to
allow replacement of a critical piece of seabed equipment, the
top U.S. oil spill official said on Thursday. []
TAKEOVER TALK
BG Group <BG.L> bucked the trend and posted the biggest
gains on the index, up 4 percent. Traders pointed to the Daily
Mail's market report which notes speculation that Royal Dutch
Shell <RDSa.L> is considering a takeover bid of the gas
producer. []
Among midcaps, Dana Petroleum <DNX.L> added 5.7 percent
after state-run Korea National Oil Corp (KNOC) made a hostile
$2.9 billion cash bid for the company. []
"We are having one of the busiest M&A months of August for a
very long time as companies have got a lot of cash that they
don't know what to do with," said David Buik, senior partner at
BGC Partners.
"The takeover activity is underpinning the market, because
as soon as anything looks good value, people are looking to buy
it up."
Cairn Energy <CNE.L>, also involved in M&A activity, added
0.8 percent.
India's oil minister Murli Deora said his ministry has
sought details on the proposed acquisition of a majority stake
by Vedanta <VED.L> in Cairn India <CAIL.BO>, the local arm of
Britain's Cairn Energy. Vedanta fell 1.5 percent.
(Additional reporting by Tricia Wright, editing by Michael
Shields)
