* FTSE off 0.4 percent, U.S. policy, China data awaited
* Miners weak as commodities slide
* Leisure firms lower, TUI slumps after results
By David Brett
LONDON, Aug 10 (Reuters) - Britain's leading share index
fell on Tuesday led by mining stocks, as investors remained
cautious ahead of Chinese inflation data and the outcome of the
U.S. Federal Reserve's policy meeting.
The FTSE 100 <> was down 19.19 points, or 0.4 percent,
at 5,391.33 by 1054 GMT, having closed up 1.5 percent at
5,410.52 on Monday, its highest close since May 13, albeit in
thin trade.
Miners dipped along with base metal prices as risk appetite
waned ahead of Chinese inflation data due on Wednesday, with
Kazakhmys <KAZ.L> and Antofagasta <ANTO.L> the top fallers in
the sector, down 2.5 and 2.6 percent, respectively.
China's benchmark stock index <> slid nearly 3 percent
on Tuesday, reflecting concern that higher Chinese inflation may
prompt more tightening measures.
"The miners have been particularly sensitive to any data out
of China with the market looking for clues as to the impact of
efforts to cool excessive growth by the Chinese authorities on
commodity demand," said Giles Watts, head of equities at City
Index.
BP <BP.L>, down 1.6 percent, dragged the integrated oils
lower as crude <CLc1> weakened.
However, Cairn Energy <CNE.L> took on 1.8 percent, with the
oil explorer buoyed by vague talk of possible bid interest.
The Daily Mail's Market Report noted market whispers that a
"cash-rich oil giant" has approached Cairn with a "friendly"
takeover proposal that values the Edinburgh-based firm at 9.8
billion pounds, or 700 pence a share.
FED CAUTION
Investors remained cautious ahead of the outcome of the
Federal Reserve's policy meeting, due after the FTSE close.
The Fed may send a clear signal it is prepared to print more
money to support a faltering economic recovery if necessary.
[]
The central bank is widely expected to renew its vow to keep
rates near zero for "an extended period" and markets will watch
closely for signs officials are growing more concerned the
recovery is at risk.
"There are concerns ... with the Fed likely to downgrade its
expectations for growth if not formally then at least raise
concerns about the durability of economic growth," said Jeremy
Batstone-Carr, head of research at Charles Stanley.
U.S. stock index futures <SPc1> <DJc1> <NDc1> pointed to a
lower open on Wall Street on Tuesday.
In London, banks fell following recent strength with Royal
Bank of Scotland <RBS.L> down 2.8 percent as Credit Suisse
downgraded its rating "neutral" from "outperform" after results
last week.
Among individual fallers, International Power <IPR.L>
dropped 3 percent, as the power producer agreed to a reverse
takeover by France's GDF Suez <GSZ.PA>.
International Power also posted first-half results with
profit from operations of 524 million pounds ($836.6 million),
down from 555 million last year. []
Europe's biggest travel firm TUI Travel <TT.L> was the top
faller on the FTSE 100, down 9.2 percent after it said it
expected its full-year profit to be at the lower end of
expectations. Mid cap peer Thomas Cook <TCG.L> fell in tandem,
down 5.0 percent. []
InterContinental Hotels Group <IHG.L> shed 4.5 percent,
after the hotelier reported results, with BofA Merrill Lynch
saying the firm had a good quarter but asking "what next?".
On the upside, technology firm Smiths Group <SMIN.L> rose
2.3 percent on bullish comment from broker UBS.
And drugmakers GlaxoSmithKline <GSK.L> and AstraZeneca
<AZN.L> rose 1.4 and 0.9 percent respectively as investors
bought into their defensive qualities.
On the macro economic front, Britain's goods trade deficit
with the rest of the world narrowed more than expected in June,
rekindling hopes that a long-awaited rebalancing of the economy
could still happen. []
