* Blue-chip results dominate
* BT Group, Diageo weak as numbers, outlook disappoint
* Rio Tinto down after Chinalco stake hike deal
* Banks rally after Treasury Committee testimony
By Jon Hopkins
LONDON, 12 Feb (Reuters) - Britain's leading share index fell 1.1 percent by
midday on Thursday as investors digested a mostly grim batch of blue chip
corporate news and looked nervously ahead to U.S. retail sales numbers.
By 1146 GMT the FTSE 100 index <> was down 46.30 points at 4,187.96
reversing after a 0.5 percent gain on Wednesday.
U.S. blue chip stocks futures <DJc1> pointed to a lower Wall Street open on
Thursday as investors braced for retail sales data that could shed light on the
extent of the damage from the recession on consumer spending. []
"After the terrible UK inflationary report yesterday and deteriorating US
economic data over the last 2 weeks, we watch US retail sales this afternoon to
see how fast the consumer demand is declining," said Joshua Raymond, market
strategist at City Index.
"A steeper decline than -0.7 pct might send investors running for the
hills," Raymond added.
Telecoms firm BT Group was the biggest blue chip faller, down 6.7 percent
after its pretax profit crashed 81 percent in the third quarter due to problems
at its global network services unit, while its pension swung to a big deficit.
Drinks group Diageo dropped 5.4 percent after it reported half-year earnings
at the top of forecasts, with a 26 percent rise, but cut its profit growth
target due to the global economic slowdown.
Rio Tinto fell 0.4 percent after accompanying quarterly earnings news with
confirmation that Chinalco is upping its stake in the miner.
Rio will sell $12.3 billion in asset stakes to Chinalco and raise a further
$7.2 billion by issuing China's state-owned aluminium maker convertible notes to
cut debt, the global miner said. []
Other miners were weak too, with Antofagasta <ANTO.L>, Anglo American
<AAL.L>, and BHP Billiton <BLT.L> down between 2.9 and 4.2 percent.
The Times newspaper said before the Rio announcement that BHP Billiton
<BLT.L> <BHP.AX>, is considering making a counter bid for some of the assets of
Rio if it decides they are about to be sold too cheaply to China.
For a TAKE A LOOK on the Rio-Chinalco deal, click on []
Heavyweight oils were also a drag on the FTSE 100, with BP <BP.L> and Royal
Dutch Shell <RDSa.L> down 0.6 and 1 percent.
BRIGHT SPOTS
Inter-dealer broker ICAP <IAP.L> was the top FTSE 100 riser, up 5.8 percent
after a reassuring trading update. ICAP said its underlying full-year profit
should be within market forecasts after its third-quarter revenue rose 20
percent.
Medical device maker Smith & Nephew <SN.L> added 5 percent, after it
reported full-year sales and earnings broadly in line with forecasts, allaying
fears of cash-strapped patients delaying orthopaedic procedures.
Away from corporate news, Wolseley <WOS.L> took on 4.8 percent after
Citigroup raised its rating for the plumbing supplies firm to "buy" from "hold".
Banks were higher after the grilling of their bosses by the UK Treasury
Select Committee ended on Wednesday with government officials being quizzed on
Thursday about the troubled sector.
Regulators should be given the power to penalise banks that pay bonuses to
reward short-term deal-making rather than long-term performance, British Prime
Minister Gordon Brown told the parliamentary committee on Thursday. []
Lloyds Banking Group <LLOY.L>, Royal Bank of Scotland <RBS.L>, HSBC
<HSBA.L>, and Standard Chartered <STAN.L> gained between 1.2 and 3.6 percent.
But Barclays <BARC.L> missed out, down 2.1 percent.
(Editing by Hans Peters)
