* Oil, miners dip as commodity prices retreat
* Wolseley jumps after surprise, upbeat trading statement
* Defensive firms provide underlying support
By Simon Falush
LONDON, Feb 23 (Reuters) - Falling energy stocks and miners,
pressured after weak German data reinforced doubts about an
economic recovery, pushed Britain's top share index 0.1 percent
lower by midday on Tuesday, reversing earlier gains.
By 1208 GMT the FTSE 100 <> was 6.35 points lower at
5,345.72, retreating from a one-month high set earlier in the
session. The index snapped a five-session winning run to close
down 0.1 percent on Monday.
German business sentiment, measured by the Ifo think-tank,
fell for the first time in almost a year in February, suggesting
a harsh winter may send Europe's largest economy sliding back
into contraction in the first quarter. []
"There have been a number of people looking for forward
indicators to turn to show the upturn is slowing, and the German
data gives support for that angle," said Tim Rees, fund manager
at Insight Investments.
Energy stocks were the biggest drag on the index, pressured
as crude slipped back beneath $79 a barrel <CLc1>. BG Group
<BG.L>, BP <BP.L> and Tullow Oil <TLW.L> fell 0.1-1.8 percent.
Miners, firmly higher in early trade, tracked metal prices
lower. Rio Tinto <RIO.L>, Xstrata <XTA.L>, Lonmin <LMI.L>, Anglo
American <AAL.L> and Kazakhmys <KAZ.L> fell 0.5-1.2 percent.
Also emphasising the negative backdrop affecting the British
economy, Bank of England Governor Mervyn King raised the
prospect that indirect taxes or commodity prices could push up
inflation, when he presented economic forecasts to legislators
on Tuesday.
"The Bank of England (Governor) was relatively cautious,
giving the market a reason to pause after a recent run higher,"
Rees at Insight said.
Investors in British and global equities also held off from
taking big positions ahead of a congressional testimony by
Federal Reserve Chairman Ben Bernanke later this week.
After the surprise increase last week in the rate the Fed
charges banks for emergency loans, the market focus is on how
Bernanke explains the move in testimony in the House of
Representatives and the Senate on Wednesday and Thursday.
[]
WOLSELEY WOWS
Back in London, Wolseley was the standout gainer on the
blue-chip index, jumping 11.8 percent and reaching its highest
level in over a year, after the building materials supplier
issued a surprise, upbeat trading statement. []
Defensive stocks, which tend to fare relatively well when
risk appetite retreats, were also higher.
Support services firm Serco <SRP.L> added 1.5 percent, while
medical equipment firm Smith & Nephew <SN.L> was up 1.6 percent,
and Associated British Foods <ABF.L> gained 1.2 percent.
But Reckitt Benckiser <RB.L> fell 0.3 percent after
Britain's Office of Fair Trade said the consumer goods group may
be abusing its dominant market position in the supply of
heartburn medicines. []
Reckitt was also knocked by a downgrade to 'hold' from 'buy'
on valuation grounds by Panmure Gordon, which said it did not
see the OFT news as being particularly material to the
investment case for Reckitt.
With no significant domestic data released on Tuesday,
investors will look across the Atlantic for further clues as to
the pace of economic recovery. The U.S. Case-Shiller home price
index is due at 1400 GMT, while U.S. consumer confidence figures
will be released at 1500 GMT.
(Editing by Rupert Winchester)
