* FTSE down 1.1 percent; banks, miners hit by global worries
* Banks wane with Europe stress-test details eyed
* Sainsbury higher on Qatar speculation
By David Brett
LONDON, July 7 (Reuters) - Banks and miners led a
broad-based sell-off among Britain's top shares by midday on
Wednesday after U.S. data triggered fresh doubts over the global
recovery, while J Sainsbury <SBRY.L> rose on bid talk.
By 1033 GMT, the FTSE 100 <> was down 54.48 points at
4,910.52 or 1.1 percent, having enjoyed a strong rally on
Tuesday, up 2.9 percent, at 4,965.00, its highest closing level
since June 28.
"It is the main heavyweight sectors that are dragging us
down once again ... with the economic picture turning much more
uncertain over the last few weeks," said Joshua Raymond, market
strategist at City Index.
Miners tracked falls in base metal prices after service
sector activity in the U.S. showed economic growth in June, but
at its slowest pace since February, fuelling worries over
sluggish economic recovery.
Rio Tinto <RIO.L> and Xstrata <XTA.L>, down 2.4 and 3.2
percent respectively, have resurrected plans to spend billions
of dollars on projects in Australia after reaching an agreement
with the government on a so-called super-tax on miners' profits,
according to the Daily Telegraph.
Reinforcing the gloom, China's economy is slowing moderately
in response to a slew of government curbs on the property market
and bank lending, according to a Reuters poll. []
Energy firms were lower along with the price of crude <CLc1>
as markets worried about waning consumption, with Royal Dutch
Shell <RDSa.L> and BG Group <BG.L> shedding 1.1 and 1.0 percent
respectively.
BP <BP.L>, however, topped the FTSE leader board, up 4.1
percent as investors anticipated that potential foreign
investors could pay a premium for a stake in the oil major.
BP's chief executive Tony Hayward met with representatives
of the Abu Dhabi Investment Authority on Wednesday, a UAE
official source said. []
Banks were the biggest drag on the FTSE, retreating from
Tuesday's gains and ahead of details of Europe-wide bank stress
tests, which are likely to emerge today.
HSBC <HSBA.L>, down 3.2 percent, and Lloyds Banking Group
<LLOY.L>, off 3.1 percent, were the top fallers in the sector.
SAINSBURY SPECULATION
Britain's third-biggest grocer, J Sainsbury <SBRY.L> gained
3.9 percent and was one of only a handful of risers on the FTSE
100 supported by talk of stake building by 26 percent
shareholder and former suitor the Qatar Investment Authority.
[]
The Daily Mail's market report said there was revived
speculation that Qatar could soon increase their shareholding in
Sainsbury to 29.9 pct prior to launching a renewed 9.32 billion
pounds or 500 pence a share cash offer.
But other retailers struggled, with Marks & Spencer <MKS.L>
falling 3.3 percent after it posted a third consecutive rise in
underlying quarterly sales, though its rate of improvement
slowed a little and it joined rivals in sounding cautious about
the consumer outlook. []
The update dented sentiment in the sector, which was also
weighed by a downbeat note from RBS, which initiated its
coverage on Marks with a "sell" rating.
Next <NXT.L>, Burberry <BRBY.L> Kingfisher <KGF.L> and Home
Retail <HOME.L> fell between 1.0 and 4.1 percent.
But City Index's Raymond said upcoming company earnings
could provide reassurance to anxious investors.
"The forthcoming U.S. company reporting season could be a
nice little reminder to investors that the earnings front is not
as bad as people are fearing."
Ex-dividend factors took 0.49 points off the index on
Wednesday, with British Land <BLND.L>, Burberry <BRBY.L> and
Vedanta Resources <VED.L> all losing their payout attractions.
(Editing by Jon Loades-Carter)
