Global recovery fears weigh on FTSE

                                
 * FTSE down 1.1 pct on global recovery doubts
                                
 * CRH warns on U.S. outlook, Wolseley falls
                                
 
                                
 By David Brett
                                
 LONDON, Aug 24 (Reuters) - Britain's leading share index
dropped by midday on Tuesday as concerns over the global
recovery dented commodity and banking stocks, while Wolseley
fell after CRH warned over its outlook for the U.S.
                                
 By 1051 GMT, the FTSE 100 <.FTSE> was down 55.73 points, or
1.1 percent, at 5,179.11, having gained 0.8 percent at 5,234.84
on Monday, albeit in light volumes.
                                
 The index faced strong resistance at around 5,188.73 -- its
38.2 percent Fibonacci retracement of a fall from a high in
April to a low in July.
                                
 Irish building supplies giant CRH <CRH.I> set the tone for
the session, warning core earnings would fall 10 percent this
year, pointing to mounting concerns over the economy in the
United States.
                                
 In London, Wolseley <WOS.L>, the world's largest builders
merchant distributor which has substantial exposure to the
United States, shed 3.3 percent.
                                
 WPP <WPP.L>, the world's largest ad firm by sales, which
also has heavy U.S. exposure, fell 2.7 percent as it reported
first-half like-for-like revenue up 2.5 percent, towards the
lower end of forecasts from a Reuters poll, and warned of
tougher comparatives ahead.
                                
 Reflecting market worries over the global economy, German
debt outperformed riskier euro zone peers, driving yield spreads
wider. [ID:nLDE67N0J7]
                                
 "What's happening in the bond market has got people
spooked," Phil Roberts, technical analyst at Barclays Capital
said.
                                
 "Come September, after Labour day, the market is in the mind
frame to try the downside, so I expect there will be some more
weakness."
  Investors will closely watch U.S. Existing Home Sales for
July and the U.S. Richmond Federal Manufacturing survey for
August, both due at 1400 GMT, for further signs as to the health
of the world's biggest economy.
                                
 Wall Street index futures <SPc1> <DJc1> <NDc1> pointed to a
lower open on Tuesday.
                                
 
                                
 DOUBLE-DIP WORRIES
                                
 Britain faces the risk of sliding back into recession and
the central bank's growth forecast for this year and next may be
too optimistic, new Bank of England policymaker Martin Weale
said in an interview with the Times newspaper. [ID:nLDE67N08F]
                                
 Banks were the sharpest fallers with HSBC <HSBA.L>, which is
in talks with Old Mutual <OML.L> over the purchase of a
controlling stake in South Africa's fourth-largest bank,
Nedbank, down 1.3 percent.
                                
 Mining and energy stocks fell in tandem with commodities as
base metal prices and crude <CLc1> slid across the board on
doubts over the sustainability of demand.
                                
 India-focused mining group Vedanta Resources <VED.L> shed
5.8 percent after India's environment ministry rejected a plan
by Vedanta to mine bauxite in an eastern state, saying it
violated forest laws. [ID:nSGE67N06M]
                                
 Vedanta also faced regulatory hurdles in its bid for control
of Cairn India <CAIL.BO>, a potential deal valued at $9.6
billion that could give the group a slice of India's oil
reserves. [ID:nDEL003330]
                                
 Cairn Energy <CNE.L> fell 1.1 percent after the oil explorer
struck gas in Greenland, which disappointed investors who had
hoped for an oil find, and said the sands were not of a type
that usually yields commercial quantities. [ID:nLDE67N06V]
                                
 Elsewhere in the sector, Chilean miner Antofagasta <ANTO.L>
shed 2.3 percent after it trimmed its annual production target,
even though it posted a near doubling in first-half earnings per
share. [ID:nLDE67M1FM]
                                
 Global miner Rio Tinto, meanwhile, fell 2.6 percent after a
Canadian newspaper linked it and a Chinese partner with a bid
for Potash Corp <POT.N>, which is fending off a $39 billion
hostile bid from BHP Billiton. Rio Tinto declined to comment.
[ID:nSYA008290]
                                
 Staying with both heavyweight miners, South Africa's
National Union of Mineworkers said its members at a Rio
Tinto-BHP Billiton <BLT.L> joint venture would vote on a strike
on Tuesday over wage demands. BHP Billiton dropped 1.2 percent.
                                
 Coal and base metals miner Xstrata <XTA.L> droped 2.2
percent after it announced a $381 million agreed takeover of
Australian-listed Sphere Minerals <SPH.AX>. [ID:nSGE67N02N]
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  For a graphic on M&A data for August, click on
  http://r.reuters.com/dag36n
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 (Graphics by Scott Barber; Editing by David Cowell)