UK stocks fall as banks weigh, offset commodities

                                
 By Dominic Lau
                                
 LONDON, April 3 (Reuters) - Britain's leading share index
fell by midsession on Thursday after a three-day winning run as
banks gave up recent gains, though commodity shares offered some
support.
                                
 By 1043 GMT, the FTSE 100 <.FTSE> was down 27.2 points, or
0.46 percent at 5,888.7 after advancing nearly 4 percent in the
previous three sessions.
                                
 "After the strong start we had to the week, particularly in
the banks ... yesterday's comments from (Federal Reserve
Chairman Ben) Bernanke mentioning for the first time that
recession was a possibility casts a little bit of a shadow,"
said Richard Hunter, head of UK equities at Hargreaves Lansdown.
                                
 "We are not out of the woods yet but obviously it's looking
much healthier than a few days ago. But the fact remains that
the market is still down virtually 10 percent for the year."
                                
 Major European indexes were also weaker by midday.
                                
 Oil shares were the top gainers after crude prices <CLc1>
steadied above $104 a barrel after surging almost $4 in the
previous session on U.S. government data showing a sharp fall in
refined fuel stocks.
                                
 Index heavyweight BP <BP.L> rose 1.3 percent, Royal Dutch
Shell <RDSa.L> gained 1.4 percent and gas producer BG Group
<BG.L> added 3.2 percent.
                                
 Miners were also standout gainers, tracking firmer precious
metal prices. BHP Billiton <BLT.L>, Rio Tinto <RIO.L>, Anglo
American <AAL.L>, Xstrata <XTA.L>, Antofagasta <ANTO.L> and
Lonmin <LMI.L> were up between 0.3 and 1.9 percent.
                                
 Banks, however, languished after gains in recent sessions,
with Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, HSBC
<HSBA.L>, Lloyds TSB <LLOY.L>, HBOS <HBOS.L> and Standard
Chartered <STAN.L> shedding between 1.5 and 4 percent.
                                
 Insurers were also down, with Royal & Sun Alliance <RSA.L>
off 3.2 percent and Legal & General <LGEN.L> falling 3 percent.
                                
 Adding to investors' credit concerns, the Daily Telegraph
said London-based hedge fund Polygon had introduced special
measures to cope with the large number of investors asking to
withdraw their money.
                                
 "We are a little bit lost for direction today. We might
possibly see some profit taking ahead of non-farm (payroll
figures from the U.S.) tomorrow," said Martin Slaney, head of
derivatives at GFT Global Markets.
                                
 Property stocks fell after Lehman Brothers downgraded the
European real estate sector and cut its 2008 net asset value
estimates by an average 5 percent and price targets by 8
percent.
                                
 British Land <BLND.L>, Hammerson <HMSO.L>, Liberty
International <LII.L>, Land Securities <LAND.L>, Segro <SGRO.L>
and Great Portland Estates <GPOR.L> lost between 1.5 and 4
percent.
                                
 Among other individual movers, Severn Trent <SVT.L> climbed
2 percent after Morgan Stanley upgraded the water utility to
"overweight" from "equal weight".
                                
 Cadbury Schweppes <CBRY.L> put on 1.2 percent after Cazenove
lifted its rating on the confectionery group to "outperform"
from "in-line".
 (Additional reporting by Michael Taylor; Editing by Quentin
Bryar)