* Fear of swine flu pandemic hits sentiment
* Banks retreat after sharp gains on Friday
* Commodity stocks slide on demand fears
* GlaxoSmithKline rises; BA and tour groups fall
By Simon Falush
LONDON, April 27 (Reuters) - Britain's leading share index
was down 0.6 percent by late morning on Monday, pressured by
banks and commodity stocks as fears of a swine flu pandemic
dented sentiment and hurt British Airways <BAY.L> and travel
companies.
By 1101 GMT the FTSE 100 <> was down 24.07 points at
4,131.92 after jumping 3.4 percent on Friday and gaining 1.5
percent last week. The UK index is down 7 percent this year but
has rallied 19 percent since hitting a six-year low on March 9.
Heavyweight commodity stocks fell sharply as raw material
prices fell on demand concerns exacerbated by the swine flu
which has already killed 103 people in Mexico.
Oil majors BP <BP.L> and Royal Dutch Shell <RDSa.L> shed 1.2
and 1.5 percent, respectively.
"It's the way markets behave. There's an intensity of
over-reaction to events like this," said Howard Wheeldon,
strategist at BGC Partners.
Markets came off their lows touched earlier in the session
as investors awaited more evidence on the seriousness of the
outbreak.
"There's going to be a marking of time until the crisis
passes or the newsflow gets worse by the hour," Wheeldon said.
Miners BHP Billiton <BLT.L>, Rio Tinto <RIO.L>, Anglo
American <AAL.L>, Xstrata <XTA.L>, Kazakhmys <KAZ.L>, Vedanta
Resources <VED.L>, Antofagasta <ANTO.L> fell 1.1-3.5 percent.
The virus from Mexico -- a major exporter of oil, coffee and
factory goods -- has spread to the United States and as far as
New Zealand. (For more on the swine flu, click on [])
The threat of a global pandemic hit shares in British
Airways <BAY.L>, the heaviest blue-chip faller, already reeling
from a severe recession, as well as other travel and
transportation operators.
British Airways descended 7.9 percent, cruise operator
Carnival <CCL.L> dropped 7 percent, Thomas Cook <TCG.L> shed 4.5
percent and TUI Travel <TT.L> sagged 4 percent, while
Intercontinental Hotels <IHG.L> slid 4.6 percent.
Rolls-Royce <RR.L>, the aero engine maker, also suffered,
losing 4 percent.
"The swine flu seems to be one of those "Black Swan" events
that has caught the market by surprise. This is a concern as to
whether it might impact any potential ... recovery chances,"
said Martin Slaney, head of derivatives at GFT Global Markets.
But GlaxoSmithKline <GSK.L> advanced 3.3 percent. Its
Relenza, or zanamivir product along with Roche's <ROG.VX>
Tamiflu, is the recommended drug for seasonal flu and has been
shown to work against viral samples of the new disease.
[]
Peers AstraZeneca <AZN.L> and Shire <SHP.L> put on 1.8 and
1.7 percent, respectively.
Banks also weighed on the index, with heavyweight HSBC
<HSBA.L>, down 2.8 percent and Standard Chartered <STAN.L> down
3.6 percent, though Royal Bank of Scotland <RBS.L> and Lloyds
Banking Group <LLOY.L> added 2.1 and 1.3 percent respectively.
Domestic economic news added to the gloom. House prices in
England and Wales fell by 10.1 percent in April compared with a
year ago, while prices declined at their slowest monthly pace
for a year, property data company Hometrack said.
The number of mortgages approved for purchase in Britain
fell by a quarter year-on-year in March the British Bankers
Association said.
Meanwhile almost 70 percent of Britain businesses plan to
freeze or cut wages this year and half expected to cut jobs or
make staff redundant, a survey by the British Chambers of
Commerce showed, the Daily Telegraph said.
Defensive utilities performed well, benefiting from a flight
to safety in the wake of the swine flu.
Centrica <CNA.L>, United Utilities <UU.L> and National Grid
<NG.L> added 2.2-2.9 percent.
Insurer Aviva <AV.L> advanced 2.4 percent after it reported
an increase in its capital cushion and said its first quarter
sales rose by a better-than-expected 11 percent.
(Additional reporting by Dominic Lau; Editing by Greg Mahlich)
