By Michael Taylor
LONDON, March 6 (Reuters) - Britain's blue-chip share index
was down 0.4 percent at mid-session on Thursday, with bank
stocks on the slide again and as investors awaited an interest
rate decision from the Bank of England <BoE).
At 1109 GMT the FTSE 100 <> was down 25.4 points at
5,828.1.
Bank stocks headed lower after hopes that U.S. bond insurer
Ambac <ABK.N> would unveil a bailout proved over-optimistic,
though analysts at UBS said the gloom surrounding HBOS <HBOS.L>
and the rest of the sector may now be overdone.
Barclays <BARC.L>, Alliance & Leicester <ALLL.L> HSBC
<HSBA.L> and HBOS <HBOS.L> were all lower.
"We've gone through the banking reporting season. The banks
are breathing a sigh of relief because they haven't admitted to
the writedowns that had been feared," said Jeremy Batstone-Carr,
head of private client research at Charles Stanley. "And yet all
that has done is push the problem onto the next reporting
period.
"We want to be out there encouraging investors to take
advantage of what is potentially a very good buying
opportunity."
On the macro front, the BoE looks set to keep interest rates
at 5.25 percent at 1200 GMT, but is expected to cut them again
by the middle of the year to shore up an economy buffeted by the
global credit crunch.
All but one of 65 economists polled last week expected the
central bank's Monetary Policy Committee to hold rates after
last month's quarter-point cut, because of concerns over rising
inflationary pressures. See []
"With a no-change, we can't expect there to be an
accompanying statement, but there might be, given how difficult
the situation is. If there is, all eyes will be more likely to
be on that," said Batstone-Carr.
"The Bank is finding itself in a difficult position ...
Growth appears to be slowing, and yet near-term inflationary
pressures are on the up. The MPC will find itself in an
impossible position -- it probably wants to cut interest rates
... but it's remit precludes it from doing so."
Across the Atlantic, U.S. stocks rose overnight on soaring
commodity prices and U.S. services sector data, despite a
surprising decline in private-sector employment for February.
Other European markets also fell in early session, while the
U.S. dollar fell to a record low against a basket of currencies.
SWITCH ON INTERNATIONAL POWER
In a busy morning for corporate results, electricity firm
International Power <IPR.L> added 6.1 percent after it posted a
17 percent rise in 2007 profit and said it expected further
growth this year. See []
Peers Scottish & Southern Energy <SSE.L> tacked on 1.9
percent, and Centrica <CNA.L> was 2.3 percent higher.
Kazakhmys <KAZ.L> advanced 1 percent after it posted a rise
in annual earnings per share. See []
As metal prices rose, BHP Billiton <BLT.L>, Anglo American
<AAL.L> and Vedanta Resources <VED.L> all featured among
gainers.
Shares in nuclear power firm British Energy <BGY.L> was up
4.7 percent as traders cited a Financial Times report that
Britain would "pull out all the stops to maximise the expansion
of nuclear power".
On the downside, British Airways <BAY.L> lost 4.6 percent to
top the losers' list after the company warned that airlines were
entering a downward cycle due to global economic weakness and
that rising fuel costs would stop it short of next year's margin
target of 10 percent.
Drugmakers were weaker after Britain looked to strengthen
the law on disclosing drug trial results following a four-year
inquiry into GlaxoSmithKline <GSK.L> delay in reporting data
linking its antidepressant Seroxat to suicide risk in teenagers.
GSK fell 1.9 percent.
(Additional reporting by Dominic Lau, editing by Will Waterman)
