* FTSE down 0.6 percent; commodities weigh
* BP lower on fresh credit worries and clean up fears
* Banks gain on legislation hopes
By David Brett
LONDON, June 25 (Reuters) - Britain's top shares fell by
midday on Friday, as BP <BP.L> slid over worries of the
financial impact of the Gulf of Mexico oil spill, the worst U.S.
environmental accident, and miners weighed due to fears for the
economic recovery.
At 1035 GMT, the FTSE 100 <> index was down 29.44
points, or 0.6 percent at 5,070.79.
BP <BP.L> knocked over 18 points off the index, falling 7.6
percent to a 14-year low, pressured by mounting concerns over
its financial position and the threat to its clean up operation
of the biggest U.S. oil spill ever from the impending hurricane
season.
A Nomura note said: "Perception of near-term credit risk is
highly damaging for BP, likely leading to constraints around
counterparty trading, the attractive roll of drawn commercial
paper and the ability to dispose of assets at attractive
prices."
Five-year BP credit default swaps, an insurance-like
instrument against debt default, widened 19 basis points to 555
basis points, CDS monitor Markit said.
"BP is staring down the barrel of an unidentified financial
liability," Stephen Pope, chief global equity strategist at
Cantor Fitzgerald.
BP's plight again dented sector sentiment with integrated
oils Royal Dutch Shell <RDSa.L> and BG Group <BG.L> shedding 0.8
and 1.8 percent respectively.
Heavyweight miners were lower as worries about the strength
of the global economic recovery weighed on demand for
commodities which fell across the board.
Eurasian Natural Resources <ENRC.L> dropped 4.4 percent,
while Rio Tinto <RIO.L> and Vedanta Resources <VED.L> shed 3.2
and 3.3 percent respectively.
The FTSE 100 closed down 78.29 points, or 1.5 percent at
5,100.23 on Thursday, its lowest closing level in almost a month
and is down 3 percent so far this week, albeit in thin trade.
Technical levels were also being watched with the index not
far off key support levels.
"If we start drifting below 4,976 then that could open up a
deep channel that could potentially take us down a further 200
points or so," Pope at Cantor Fitzgerald said.
Elsewhere, retailers were under pressure as Morgan Stanley
took an axe to its rating and targets in a cautious sector
review, noting the likely impact of budget tax changes on
consumers.
Next <NXT.L> and Kingfisher <KGF.L> were the worst off, down
1.1 and 0.9 percent respectively as the broker cut its stance on
both to "equal-weight" from "overweight".
BANKING SUPPORT
UK-listed banks topped the FTSE 100 <> leaders board,
preventing the index from sliding further, headed by emerging
markets specialist Standard Chartered <STAN.L> and global giant
HSBC <HSBA.L>, up 2.5 and 1.5 percent respectively.
A Financial Times report on Friday said that the Bank for
International Settlements (BIS) would tell the G20 summit of
world leaders this weekend it would drop proposals for a Net
Stable Funding Ratio (NSFR) for banks.
Deutsche Bank said, if the report is true, it would see this
as positive for the UK banks, whose use of wholesale funding is
higher than their peer group.
Investors also looked ahead to the outcome of the G8 and G20
world leaders' summits in Canada this weekend, with banking
regulation and levies sure to be on the agenda. []
U.S. stock index futures pointed to a weaker open on Wall
Street on Friday, ahead of the final estimate of U.S. GDP growth
in the first quarter, due to be published at 1230 GMT and the
final reading of the June University of Michigan consumer
sentiment index at 1355 GMT.
(Editing by Sharon Lindores)
