* FTSE 100 falls 4.4 pct at midday
* Energy stocks, banks slump
* BoE expected to cut interest rate
By Harpreet Bhal
LONDON, Nov 6 (Reuters) - Britain's leading share index fell
4.4 percent by midday on Thursday, weighed down by energy and
banking stocks, ahead of an expected interest rate cut by the
Bank of England.
By 1110 GMT, the benchmark FTSE 100 <> had lost 203.34
points to 4327.39.
Energy firms were weak, as crude oil <CLc1> dipped 1.8
percent to close to $64 a barrel. BP <BP.L>, Cairn Energy
<CNE.L> and Royal Dutch Shell <RDSa.L> fell between 3 and 4.3
percent.
Banking stocks were lower, ahead of the BoE's rate-setting
meeting later on Thursday. Analysts expect the central bank to
cut the interest rate by at least half a percentage point from
4.5 percent, to spur a faltering domestic economy. The BoE is
due to announce its decision at 1200 GMT.
Peter Dixon, UK economist at Commerzbank, said the market
has already priced in a rate cut, explaining the lack of a rally
on the back of rate cut anticipation.
"(The FTSE) is falling at a significant pace. It does look a
bit overdone ... It is the kind of situation we would expect at
a time of extreme financial unrest," he said.
"A rate cut is not going to prevent the UK from falling into
recession."
Hedge fund Man Group <EMG.L> fell 29 percent, making it the
highest loser on the index. The company reported a 24 percent
fall in pretax profit to $622 million in the six months to
end-September due to a drop in performance fees and amortisation
charges.
Private equity group 3i <III.L> also retreated, falling by
9.9 percent, after the firm said first-half revenues from
company disposals were down 43 percent as the credit crisis had
made it difficult to sell companies in which it had invested.
Miners fell, tracking downward pressure on metals prices as
the dollar climbed. Vedanta Resources <VED.L> slipped 10.4
percent, after the India-focused miner posted a 24.7 percent
drop in first-half profit to $350 million, but said it was well
placed to cope with lower metal prices.
BHP Billiton <BLT.L>, Rio Tinto <RIO.L>, Xstrata <XTA.L>,
Lonmin <LMI.L> and Kazakhmys <KAZ.L> shed between 5.9 and 10.4
percent.
HOUSE PRICES PLUNGE
The BoE's interest rate decision comes at a time when
British house prices are plunging further. House prices fell by
a record 14.9 percent on the year in October, the Halifax house
price survey showed. []
Credit Suisse analyst Jonathan Pierce warned that British
banks could face deterioration in conditions through to the
first quarter next year.
Pierce said in a note that the deterioration "will be
relatively severe" as the global credit crisis affects markets
and the economy. Royal Bank of Scotland <RBS.L> could face
losses this year and next, he said.
RBS fell 4.1 percent, while HSBC <HSBA.L> sank 7.3 percent.
Among other losers on the index was British technology group
Invensys <ISYS.L>. The stock fell 12.2 percent, as the company's
first-half operating profit missed analysts' forecasts.
On the upside, shares in Anglo-South African insurer Old
Mutual <OML.L> climbed 4.3 percent to become the top gainer on
the FTSE 100, after the company unveiled plans to derisk its
troubled U.S. life business and appointed former Prudential
<PRU.L> finance chief Philip Broadley as its new finance
director.
(Editing by Erica Billingham)
