* FTSE 100 down 0.7 percent
* Banks hit by Goldman Sachs fraud charges
* Airlines, travel companies fall, disrupted by volcanic ash
By Tricia Wright
LONDON, April 19 (Reuters) - Britain's top share index fell
by midday on Monday, as fraud charges against Goldman Sachs
weighed on the banking sector, while travel firms fell on
disruption caused by the ash cloud from an Icelandic volcano.
By 1209 GMT, the FTSE 100 <> was down 37.87 points, or
0.7 percent, at 5,706.09, after it fell 1.4 percent on Friday.
"Is it the natural disaster that we've got clouding the
markets, or is it just Goldman Sachs so (investors are saying)
look, this is a catalyst for profit taking? I think it's
probably the latter, because it started on Friday night," said
Mike Lenhoff, chief strategist at Brewin Dolphin.
Banks were the biggest drag on the blue chips, extending
Friday's sharp decline, with HSBC <HSBA.L>, Barclays <BARC.L>
and Standard Chartered <STAN.L> off 1.1 to 1.5 percent.
Goldman Sachs <GS.N> shares dropped on Friday after the U.S.
bank was charged with fraud in the structuring and marketing of
a debt product tied to subprime mortgages.
Investors were unsettled by worries the move could increase
the chances of tougher reform of financial regulations, with the
case seized on by politicians in the U.S. and Europe as a reason
for closer scrutiny or tighter rules for banks.
But Royal Bank of Scotland <RBS.L>, which is majority-owned
by the British government took on 2.9 percent, the top blue chip
riser, adding to gains it made on Friday when BofA Merrill Lynch
hiked its target price and added the stock to its Europe 1
investment list.
Citigroup <C.N> rose 3.3 percent in premarket trading on
Monday after the company reported its first-quarter results.
[]
Mining stocks weighed heavily on the FTSE 100 as metal
prices dropped as the Goldman allegations rippled through
markets, denting investor appetite for risk.
Kazakhmys <KAZ.L>, Vedanta Resources <VED.L> and Antofagasta
<ANTO.L> were the worst off, shedding 2 to 2.5 percent.
Energy stocks were hit as crude <CLc1> dropped below $81 a
barrel, against the backdrop of dampened risk appetite and as
European flights remained disrupted, curbing jet fuel use.
BP <BP.L>, BG Group <BG.L>, Cairn Energy <CNE.L> and Tullow
Oil <TLW.L> slipped 0.6 to 1.1 percent.
TRAVEL TURMOIL
Airlines and travel companies were pressured as the huge ash
cloud from an Icelandic volcano kept airspace over most of
Europe closed for a fifth day.
Tour operator Thomas Cook <TCG.L> was the biggest blue chip
faller, off 4.4 percent, while British Airways <BAY.L> dropped
3.3 percent and mid cap easyJet <EZJ.L> fell 4.3 percent.
TUI Travel <TT.L> shed 3.8 percent, with Charles Stanley
downgrading it to "hold". TUI said the crisis had so far cost it
around 20 million pounds in lost revenues and that its estimated
daily costs would run at 5 to 6 million pounds thereafter.
[]
Against a background of heightened risk aversion, defensive
stocks were in demand. Cigarette firm British American Tobacco
<BATS.L> put on 0.5 percent, while drugmaker AstraZeneca
<AZN.L>, helped by an upgrade to "neutral" from Exane BNP
Paribas, put on 0.1 percent.
BT Group <BT.L> was a big riser, up 1.1 percent after
JPMorgan upgraded its rating for the telecoms operator to
"overweight" from "neutral", saying operational momentum was
underappreciated and pension concerns overdone.
(Reporting by Tricia Wright; Editing by Louise Heavens)
