* Miners weak; Deutsche Bank downgrades BHP Billiton
* Banks gain; Barclays up on hopes no new funds needed
* Vodafone weak as Banc of America-Merrill Lynch cuts target
By Jon Hopkins
LONDON, March 27 (Reuters) - Britain's top share index was
0.3 percent lower at midday on Friday, having reversed earlier
gains, with weakness in miners countering gains from the oil
majors and banks.
By 1205 GMT, the FTSE 100 index <> was 12.34 points
lower at 3,912.86, having closed 24.95 points, or 0.6 percent,
higher in the previous session.
"We're in a period of contemplation at the moment ... No one
is expecting too much radical from the G20 meeting next week but
if there could be some sort of co-ordinated agreement, a linking
of arms that would have to be seen as a result," Richard Hunter,
strategist at Hargreaves Lansdowne, said.
"You have to allow time for the measures already taken to
take traction, so in the absence of any obvious catalyst the
market is likely to just tread water," Hunter added.
Heavyweight mining issues were lower at midday as metal
prices eased back and broker comment had an impact.
Deutsche Bank cut its earnings estimates and targets for the
sector as it sees no underlying recovery yet in the sector. It
downgraded its stance on BHP Billiton <BLT.L> and Kazakhmys
<KAZ.L>, down 2.3 percent and 4.8 percent respectively.
Lonmin <LMI.L> was the biggest FTSE 100 faller, down 5.7
percent, while Eurasian Natural Resources <ENRC.L>, and Fresnilo
<FRES.L> lost 5.8 percent and 4.2 percent respectively.
Rio Tinto <RIO.L> bucked the weak sector trend, adding 1.5
percent. Australia may force Rio Tinto <RIO.L> to
"Australianise" its top management as a condition for approving
its $19.5 billion tie-up with Chinese state-owned metals firm
Chinalco, a report said on Friday. []
Mobile phones heavyweight Vodafone <VOD.L> was a drag on
blue chip sentiment, off 2 percent as Banc of America-Merrill
Lynch cut its target to 160 pence to reflect lower growth.
Insurers were also weak, reflecting some uncertainty over
European Union plans to reform the sector to make it safer for
policyholders. [].
Aviva <AV.L>, Prudential <PRU.L>, Friends Provident <FP.L>,
and Admiral Group <ADM.L> shed between 1.3 percent and 3.7
percent.
BANKS IN DEMAND
Banks were the strongest gainers on the FTSE 100 index,
extending a recent recovery, with Barclays <BARC.L>, Lloyds
Banking Group <LLOY.L>, Royal Bank of Scotland <RBS.L> and HSBC
<HSBA.L> up between 0.4 percent and 8.7 percent.
Barclays has gained more than 200 percent since hitting its
low so far this year, on Jan. 21.
Britain's financial regulator has concluded a stress test on
Barclays and is satisfied the bank does not need any fresh
capital, a person familiar with the matter said on Friday.
[]
The British government will have a big part in the country's
banking sector for years to come but competition and choice for
consumers must be maintained, UK Finance Minister Alistair
Darling said on Friday. []
Blue chip defence stocks found support, with BAE Systems
<BAES.L> up 3.1 percent and Rolls-Royce <RR.L> ahead 1.9
percent, snapping a recent weak run.
Britain's economy slowed even more sharply than expected in
the last three months of 2008 as construction output plunged,
official data showed on Friday.
The Office for National Statistics said the economy shrank
by 1.6 percent in the fourth quarter, the sharpest decline since
1980. Analysts had expected an unchanged reading of -1.5
percent.
The annual rate of decline was revised down to 2.0 percent,
the sharpest fall since 1991. []
House prices in England and Wales fell 16.5 percent on the
year in February, the Land Registry said on Friday.
[]
Investors will eye a rash of U.S. data later, with personal
income, personal consumption, PCE price index and the
Reuters/University of Michigan sentiment index.
Ahead of the data, U.S. stock index futures pointed to a
lower open on Wall Street after strong gains on Thursday.
(Editing by Andrew Macdonald)
