* Banks weaker awaiting Citigroup earnings
* Oils, miners retreat with commodity prices
* Cadbury up as it recommends Kraft deal acceptance
By Jon Hopkins
LONDON, Jan 19 (Reuters) - Britain's leading share index was
1 percent lower by midday on Tuesday, led down by weaker banks
ahead of earnings from U.S. rival Citigroup <C.N>, and with
commodity issues easier as crude and metal prices fall.
By 1148 GMT, the FTSE 100 index was 52.34 points lower at
5,442.05, reversing MUonday's 39.02 point gain.
"UK blue chips are under some considerable pressure, with
the FTSE back to levels seen on the first trading day of 2010,"
said Philip Gillett, sales trader at IG Index.
Weak banks were the main drag on the UK blue chip index,
reversing some of Monday's rally as sentiment regarding the U.S.
banks reporting season waxed, with market participants
anticipating Citigroup's <C.N> fourth-quarter results.
Barclays <BARC.L> fell 2.2 percent as Credit Suisse cut its
target price to 350 pence from 400.
HSBC <HSBA.L>, Royal Bank of Scotland <RBS.L>, Lloyds
Banking Group <LLOY.L> and Standard Chartered <STAN.L> shed
between 0.5 and 2.2 percent.
Oil majors dragged on the FTSE as crude <CLc1> prices held
below $79 a barrel. BP <BP.L>, Royal Dutch Shell <RDSa.L> and BG
Group <BG.L> lost 0.8 to 1 percent.
Mining shares were lower, reversing Monday's solid gains as
metal prices turned down. Kazakhmys <KAZ.L>, Rio Tinto <RIO.L>,
Anglo American <AAL.L>, Antofagasta <ANTO.L>, and BHP Billiton
<BLT.L> fell 0.5 to 2 percent.
SABMiller <SAB.L> was the biggest FTSE 100 faller, down 3
percent, after the brewer missed forecasts as it reported flat
third-quarter worldwide underlying beer volumes amid varied
regional consumer demand. []
INFLATION TOPS FORECASTS
Higher than forecast British inflation news also had an
impact. UK CPI rose 0.6 percent in December, taking the annual
rate up to 2.9 percent from 1.9 percent in November, the biggest
monthly rise in the annual index since records began and higher
than expectations for a rise to 2.6 percent. []
Sterling hit a four-month high against the euro and gilt
futures tumbled after the above-forecast reading stoked some
speculation that interest rates may rise faster than expected.
On the upside, Cadbury <CBRY.L> was the biggest FTSE 100
riser, adding 3.5 percent after it recommended shareholders
accept an offer from Kraft <KFT.N> valuing the chocolate maker
at around 840 pence per share or 11.9 billion pounds ($19.2
billion), plus investors will also get a 10 pence dividend.
[]
Burberry <BRBY.L> was another strong gainer, up 3.5 percent
after the luxury goods group smashed third-quarter revenue
forecasts and predicted annual profit towards the top of market
expectations. []
Utilities saw good demand, helped by a Deutsche Bank sector
upgrade to "neutral" from "underweight", with Severn Trent
<SVT.L>, United Utilities <UU.L>, Scottish & Southern Energy
<SSE.L>, and National Grid <NG.L> adding 0.5 to 2.4 percent.
Severn Trent said it would accept regulator Ofwat's final
price determination, leading to a rebasing of its dividend.
[]
Mobiles heavyweight Vodafone <VOD.L> provided the most
strength for the blue chips, rallying 0.9 percent after recent
weakness helped by an upgrade in target from BofA Merrill Lynch.
Beverage cans maker Rexam <REX.L> also got a lift from BofA
Merrill Lynch, gaining 2.1 percent as the broker resumed
coverage on the firm with a "buy" rating and a 380 pence target.
And AB Foods <ABF.L> took on 0.8 percent as Morgan Stanley
raised its rating to "overweight" from "underweight".
"After yesterday's broad base strength a degree of caution
has returned to stock markets today and the move by the FTSE
back below 5,450 suggests that in the short-term we may well see
more pressure on share prices," Philip Gillett said.
(Editing by Louise Heavens)
