* FTSE 100 down 0.7 percent in holiday-thinned trade
* Miners, oils pressured as commodity prices fall
* Intertek top riser after MSCI inclusion
By Simon Falush
LONDON, Aug 18 (Reuters) - Britain's top shares retreated on
Wednesday, led by banks which were hit by nagging doubts on
global economic recovery, while energy stocks and miners tracked
weaker commodity prices.
The FTSE 100 <> was down 35.85 points, or 0.7 percent,
at 5,314.70 by 0813 GMT, after ending 1.4 percent higher on
Tuesday at 5,350.55 for its highest close in a week.
Banking stocks were out of favour as worries about economic
growth again saw investors retreat from cyclical stocks. HSBC
<HSBA.L> was down 2 percent.
Markets have held in a fairly tight range over the last
month, not moving far from the 5,300 level, with volumes thin as
many investors are away for August.
"There's no clear trend and the market is fairly listless
but under the surface lies a nagging concern that the Western
economies are facing a Japan style scenario where they lost two
decades," said Jeremy Batstone Carr, head of research at Charles
Stanley.
Technical factors were also keeping the index moves fairly
limited. Recent highs of around 5,410, and the 5,435 61.8
percent retracement of this year's down move from 5,833 to the
lows at 4,790, are acting as resistance, said Michael Hewson,
analyst at CMC Markets.
Mining stocks were under pressure, falling back after an
advance on Tuesday as metal prices weakened as doubts about the
demand outlook prevailed.
Highlighting these concerns, Eurasian Natural Resources
<ENRC.L> shed 2.9 percent after the Kazakh miner said it was
wary about commodity prices in the second half, when posting a
63 percent rise in first-half earnings on higher output and
prices. []
M&A WATCH
BHP Billiton <BLT.L> slipped 1.3 percent after launching a
hostile $39 billion bid for fertiliser group Potash Corp
<PTO.TO>.
The fall was in line with the mining index <.FTNMX1770>,
with some traders saying the limited move reflected scepticism
about the deal. []
Energy stocks were also on the back foot, as crude prices
<CLc1> fell after an industry report signalled petroleum
inventories in top consumer the United States were headed for a
record.
BP <BP.L>, Royal Dutch Shell <RDSa.L> and Cairn Energy
<CNE.L> shed 0.8-1.3 percent.
Bank of England policymakers considered the case for both
easing and tightening policy this month, before voting eight to
one to keep interest rates at a record low of 0.5 percent,
minutes showed on Wednesday. []
This had little impact on the market but any indication that
there might be a more imminent rate rise than was expected could
have sent shares lower as a higher interest rate environment
tends to dampen lending and growth.
Anglo American <AAL.L>, British American Tobacco <BATS.L>,
Carnival <CCL.L>, Fresnillo <FRES.L>, Hammerson <HMSO.L>, HSBC
<HSBA.L>, Pearson <PSON.L>, Prudential <PRU.L> and Standard Life
<SL.L> fell after going ex-dividend.
A broker downgrade weighed on Diageo <DGE.L>, off 1.2
percent, as HSBC cut its rating for the drinks firm to "neutral"
from "overweight" and reduced its target price to 1,250 pence
from 1,320 pence. []
On the upside, Intertek <ITRK.L> rose 5.3 percent to be the
top blue-chip riser, as tracker funds bought into the stock
following news that the testing equipment company was to be
added to MSCI Inc's <MSCI.N> World Stock Index <.MIW000000PUS>.
The only U.S. data to be released on Wednesday will be
weekly mortgage and refinancing indexes, due at 1100 GMT.
(Editing by Jon Loades-Carter)
