* Down 63.15 points at 4,108.10 by 1157 GMT
* Investors eye slew of U.S. data
* UK economy shrinks at fastest rate since 1990
By Nicholas Vinocur
LONDON, Nov 26 (Reuters) - Britain's top share index was
down 1.5 percent at midday on Wednesday, with banks and oil
stocks leading the fall on renewed caution as investors braced
for more news about the health of the U.S. economy.
At 1157 GMT, Britain's FTSE 100 <> was 63.15 points
lower at 4,108.10, after rising more than 10 percent in the
previous two sessions.
Oil shares led falls on the blue-chip index, with Petrofac
<PFC.L> down 5.3 percent, Royal Dutch Shell <RDSa.L> falling 3.7
percent, and Tullow Oil <TLW.L> dropping 3.2 percent.
Banks erased earlier gains, as HBOS <HBOS.L>, Standard
Chartered <STAN.L> and HSBC <HSBA.L> all lost between 1.9 and
6.2 percent.
Royal Bank of Scotland <RBS.L> shed 1.5 percent. The bank,
whose losses on complex debt led to a 20 billion pound ($31
billion) British government rescue, has agreed to sell its
65-branch retail banking network in the U.S. state of Indiana to
Old National Bancorp <ONB.N>. []
Data on Wednesday showed Britain's economy shrinking by 0.5
percent in the third quarter, its fastest rate since 1990, while
household spending dropped for the second quarter in a row.
While the FTSE 100 showed little reaction to the UK data,
which was in-line with expectations, market participants looked
ahead to new jobless, consumption and price data for the United
States, due for release at 1330 GMT, for signs of the severity
of the economic downturn.
In a move to stimulate the U.S. economy, the Federal Reserve
threw a massive life-line to consumers, with two new programmes
aimed at making it easier for them to obtain loans for homes,
cars and on credit cards.
Despite a weakening outlook for the British economy,
analysts said shares could rally in coming weeks as investors
hunt for bargains in oversold stock.
"The market looks extremely cheap and oversold, and for what
it's worth, we think we're near the bottom despite deterioration
in the economic outlook," said Rohina Rathour, head of UK
investments at Sarasin Chiswell.
"We have a very proactive set of central banks across the
world and that's a more positive sign that this recession will
turn around more quickly than previous recessions."
"It's only natural for the market to give back some of its
gains after rising 10 percent," she added, referring to Monday's
rally.
Utilities, usually seen as defensive stocks because of their
regular income streams, also lost ground.
British water company United Utilities <UU.L> was the FTSE
100's fifth-largest faller, dropping 4.5 percent after it cut
dividend payments by 30 percent, despite reporting a 6 percent
rise in first-half underlying profit. National Grid <NG.L> also
dropped 3.5 percent.
JOHNSON MATTHEY OUTPERFORMS
Johnson Matthey <JMAT.L> rose 12.6 percent in a downward
market after the platinum producer said underlying second-half
pretax profit should be between 5 and 15 percent lower, in line
with market forecasts, as it met expectations with a 20 percent
rise in underlying first-half profit.
Credit Suisse analysts said the range given for the second
half should provide some comfort.
Compass Group <CPG.L> added nearly 10 percent after the
world's biggest caterer posted a 30 percent increase in annual
profit, meeting expectations, and said trading in the new
financial year had started well.
Miners were firmer, except Rio Tinto <RIO.L> which was down
3 percent to extend Tuesday's nearly 37 percent fall after BHP
Billiton <BLT.L> walked away from its hostile takeover bid for
Rio.
Rio said on Wednesday it was confident it could sell
billions of dollars in assets to pay down massive debt, despite
concerns about a lack of buyers. []
Among other miners, Kazakhmys <KAZ.L>, Lonmin <LMI.L> and
Xstrata <XTA.L> shed between 1 and 2 percent. Antofagasta
<ANTO.L> bounced 4.4 percent and BHP rose 1.5 percent.
(Editing by Simon Jessop)
