By Dominic Lau
LONDON, March 20 (Reuters) - Britain's FTSE 100 <>
index edged down by mid-session on Thursday as falls in metal
and oil prices weighed on commodity shares, though Rentokil
Initial <RTO.L> rose sharply after hiring a turnaround team.
By 1147 GMT, the FTSE 100 was down 25.2 points, or 0.45
percent, at 5,520.4, having fallen 1.1 percent on Wednesday. The
London stock market will close on Thursday for a four-day Easter
break and will resume trading on Tuesday.
The UK benchmark index has lost more than 14 percent this
quarter, on course for its worst three-monthly loss since the
third quarter of 2002.
"There is a bit of market fatigue setting in and oil being
down below $100 ... mining and resource stocks fall on the back
of that because of the unwinding of risk," said Martin Slaney,
head of derivatives at GFT Global Markets.
"Whether it's the beginning of the end of the commodity
bubble, I don't think it is, it's an inevitable correction," he
said. "Gold is still a long-term haven but ahead of the long
weekend it's time for people to wrap things up and step aside."
Miners were the worst hit as metal prices fell, with gold
down more than 4 percent to a one-month low as investors took
profits in the face of the rising dollar.
Vedanta Resources <VED.L> slumped 6.4 percent, while
Antofagasta <ANTO.L> shed 4.3 percent and Anglo American <AAL.L>
dropped 4.8 percent.
Oil shares were also weaker, tracking lower crude prices
<CLc1>. BP <BP.L> and Royal Dutch Shell <RDSa.L> lost 2 percent,
while Cairn Energy <CNE.L> fell 6.5 percent.
All major U.S. stock indexes fell more than 2.4 percent on
Wednesday as plunging gold and oil prices drove energy and
mining shares lower, and speculation that Merrill Lynch <MER.N>
may need to take more writedowns stoked concerns over the credit
crisis. Asian shares were broadly weaker on Thursday.
The Bank of England (BoE) pumped an extra 5 billion pounds
($9.9 billion) in weekly loans into the interbank market on
Thursday but some analysts said it was not enough to ease
tensions in fragile money markets. []
David Buik of Cantor Index said he hoped Thursday's
scheduled meeting on financial stability between the BoE and top
UK banks could help stabilise the market.
HBOS REBOUNDS
Mortgage lender HBOS <HBOS.L>, which bore the brunt of
rumours of banking sector troubles on Wednesday, rebounded 5.4
percent. Lloyds TSB <LLOY.L> was up 1.5 percent.
Royal Bank of Scotland <RBS.L>, HSBC <HSBA.L>, Alliance &
Leicester <ALLL.L> and Standard Chartered <STAN.L>, however,
were down.
The credit crisis took another turn in the hedge fund
sector.
The Financial Times said Endeavour Capital, a $3 billion
London hedge fund, lost more than a quarter of its value as it
became the biggest victim of the unwinding of a popular Japanese
government bond trade.
Hedge fund Man Group <EMG.L> shed 4 percent.
But Rentokil Initial jumped more than 20 percent after news
the pest control-to-parcel delivery firm had hired the
management team that turned around chemicals group ICI, in a bid
to recover from two profit warnings that have hammered its
shares.
British Airways <BAY.L> bounced 4 percent after Wednesday's
steep losses and as oil prices eased.
(Additional reporting by Rebekah Curtis; Editing by David
Hulmes)
