* FTSE 100 closes down 0.2 pct at 4,163.61
* Investors digest 100-bps interest-rate cut
* Oils, banks rise; miners fall
By Rebekah Curtis
LONDON, Dec 4 (Reuters) - Britain's FTSE 100 <> ended a
volatile session slightly lower on Thursday as investors
digested a 100-basis point cut in interest rates and losses in
miners eclipsed stronger oils.
Britain's benchmark share index closed down 6.35 points, or
0.2 percent, at 4,163.61 points, having whipsawed in a trading
range of 4,090 and 4,261 points.
The Bank of England slashed borrowing costs by a full
percentage point to shore up Britain's deteriorating economy and
stave off the threat of deflation.
The central bank warned further measures would be required
to hold the economy back from plunging into deep recession.
The European Central Bank cut interest rates a record 75
basis points to 2.50 percent and forecast the euro zone would
stay in recession next year.
Among banks, HBOS <HBOS.L> added 7.4 percent, HSBC <HSBA.L>
gained 1.7 percent and Royal Bank of Scotland <RBS.L> also rose.
But Lloyds TSB <LLOY.L>, Barclays <BARC.L> and Standard
Chartered <STAN.L> all closed lower.
"While banks have had a decent run today, I'm not sure it's
something that's going to continue for much longer," said Peter
Dixon, an economist at Commerzbank. "The macro environment in
which were trading is, frankly, dire," he said.
"There are concerns that even though the central banks
around the world are finally getting the bit between their teeth
and they're starting to cut rates, it isn't enough to prevent
what is going to be quite a major slowdown, and that's going to
have a major impact on profitability next year."
Sterling hit an all-time low against the euro and a 6
3/4-year trough against the dollar on Thursday afternoon.
Sweden and New Zealand also cut rates earlier in the day.
"Policy makers have changed their views on where we're
heading, and they're not far behind the market," said Dixon.
"The markets have been given what they think is necessary. It's
neither too hot nor too cold."
OIL SECTOR GAINS
Oil shares rose, with BP <BP.L> up 1.1 percent, while BG
Group <BG.L> added 6.3 percent.
Miners were the top-weighted losers on the index, with
Goldman Sachs downgrading the metals and mining sector. Rio
Tinto <RIO.L>, Antofagasta <ANTO.L> and BHP Billiton <BLT.L> all
fell between 1.4 and 5.3 percent.
U.S. stocks were slightly lower as the London market closed
for the day, as a report showed factory orders plunged for a
third straight month in October. Investors looked ahead to
non-farm payrolls data due on Friday, the next major gauge of
the state of the struggling U.S. economy.
Private equity firm 3i Group Plc <III.L> dropped 8.9 percent
after it said it is to reduce its headcount by about 15 percent
in response to toughening market conditions.
Insurers were among top gainers in London, lifted by Friends
Provident <FP.L>, which soared 6.3 percent on news that
potential acquirer Resolution has secured about 500 million
pounds ($726.5 million) of investor backing for its stock market
listing.
Peers Aviva <AV.L>, Prudential <PRU.L> and Standard Life
<SL.L> were up between 1.5 and 4.4 percent.
Reed Elsevier <REL.L> fell 4.5 percent after RBS cut its
rating on the Anglo-Dutch publisher to "hold" from "buy".
Stagecoach Group <SGC.L> shed 7.1 percent after Panmure
Gordon cut its target price to 160 pence from 205 pence.
(Additional reporting by Jon Hopkins and Dominic Lau; Editing
by Hans Peters)
