FTSE falls 1.9 pct, ends three-day winning streak

                                
 * FTSE 100 falls 1.9 pct at midday
                                
 * BT slumps after says to miss forecasts
                                
 * Banks and telcos fall
                                
 
                                
 By Harpreet Bhal
                                
 LONDON, Oct 31 (Reuters) - Britain's blue-chip share index
shed 1.9 percent by midday on Friday to end a three-day rally,
weighed down by banks and telcommuications firms.
                                
 At 1158 GMT, the FTSE 100 <.FTSE> was down 80.14 points to
4,211.51. The index has gained 8.3 percent this week and is on
track for its best weekly rise since September 2001. However,
the benchmark index is still down 13.8 percent in October. 
                                
 Banks were the biggest losers as fears mounted that a round
of interest rate cuts was not enough to stem to flow of
worsening corporate earnings and bolster comsumer consumption in
major economies.
                                
 Barclays <BARC.L> dropped 11 percent after investors reacted
negatively to its plans to raise $12.1 billion from Qatar, Abu
Dhabi and elsewhere to boost capital. The stock briefly made it
to the top of the FTSE 100 gainers list in early trade.
                                
 HSBC <HSBA.L> shed 9 percent after Goldman Sachs downgraded
Europe's biggest bank to "sell" from "hold". Lloyds TSB <LLOY.L>
and HBOS <HBOS.L> fell 4 and 3.7 percent respectively.
                                
 Jeremy Badstone-Carr, head of private client research at
Charles Stanley, said the market may be experiencing profit
taking after a "reasonable recovery" in the last few days.
                                
 "I think sentiment is improving ... investors might now have
a bit of a nibble at equity markets," he said.
                                
 BT Group <BT.L> was the top loser on the index, plunging
nearly 22 percent after the telecoms firm warned it might miss
earnings forecasts for the second quarter due to poor
performance at its Global Services Unit, prompting the
resignation of the unit's boss.
                                
 Oil and gas producers also took a beating after crude oil
prices <CLc1> slipped to $63.8 a barrel. BP <BP.L>, Royal Dutch
Shell <RDSa.L> and Cairn Energy <CNE.L> shed between 0.4 and 2.3
percent.
                                
 On the upside, defensive sectors rallied. GlaxoSmithKline
<GSK.L> surged 3.2 percent, after the company assured that there
was no liver-safety issue to its Avadia drug.  
                                
 Supermarkets Tesco <TSCO.L> and Morrison Supermarkets
<MRW.L> advanced between 2.7 and 2.5 percent.
                                
 Associated British Foods <ABF.L>, owner of retail outlet
Primark, gained 3.1 percent after Goldman Sachs upgraded the
company to "buy" from "neutral", saying the retailer offers
relatively defensive characteristics in a recessionary
environment, given the diversity of its business model.
                                
 Friends Provident <FP.L> climbed 3.8 percent. The UK life
insurer said it is abandoning the sale of wealth management unit
Lombard, nine months after putting the business on the market.
 (Editing by Quentin Bryar)
 ($1=.6146 Pound)