* FTSE 100 down 2.1 pct
* Banks down as S&P U.K. outlook to negative
* U.K. retail sales better than f'cast, borrowing data worse
* Miners, oils weaker on Fed comments
By David Brett
LONDON, May 21 (Reuters) - A cut in the UK's ratings outlook
from agency Standard & Poor's weighed on Britain's top share
index, with weakness in heavyweight oils, miners and banks
contributing to a 2.1 percent by midday on Thursday.
At 1033 GMT, the FTSE 100 index was 94.46 points lower at
4,373.95 having closed 13.84 points lower on Wednesday.
S&P revised down its ratings outlook for the UK to negative
from stable, prompting already weak UK stocks to fall further
and the pound to slip sharply against the dollar <GBP=>.
The bleak picture for the UK's finances was reinforced by
data showing public borrowing hit a record high for an April
since records began in 1984. []
"Today's figures marked an inauspicious start to the new
financial year. And coupled with S&P's surprise decision to put
the UK on negative outlook - the cherished AAA rating is now
under threat - the spotlight is very much on the state of the
public finances," says Colin Ellis of Daiwa Securities.
Banks weighed heaviest on the UK blue chip index, with HSBC
<HSBA.L>, Royal Bank of Scotland <RBS.L>, Barclays <BARC.L>,
Standard Chartered <STAN.L>, and Lloyds Banking Group <LLOY.L>
shedding 2.8 to 3.5 percent.
The S&P announcement and borrowing data took the shine off
numbers from the Office of National Statistics which showed
British retail sales rose at nearly double the rate expected by
analysts in April, gaining 0.9 percent month-on-month.
Commodity issues fell as worries about the U.S. economic
recovery created demand concerns, after the Fed lowered its 2009
forecast for GDP on Wednesday, undercutting recent optimism that
the economy might be turning the corner.
"The Fed comments have cast uncertainty over things. After
we started to have a lot of talk about green shots the Fed has
really eliminated a lot of this," said Daniel Harris, a trader
at CFD specialists Blue Index.
Oil majors fell back as crude <CLc1> weakened, with Royal
Dutch Shell <RDSa.L>, BP <BP.L>, BG Group <BG.L>, Cairn Energy
<CNE.L>, and Tullow Oil <TLW.L> all down between 0.2 and 2.3
percent.
Miners retreated with lower metal prices, led by Kazakhmys
<KAZ.L> and Eurasian Natural Resources <ENRC.L> down 6.6 and 7.4
percent respectively, while BHP Billiton <BLT.L>, Xstrata
<XTA.L>, and Rio Tinto <RIO.L> fell 2.6 to 5.1 percent.
BRITISH LAND, C&W RESULTS WEIGH
Property group British Land <BLND.L> slid 6.4 percent after
it saw its full-year net asset value tumble 64 percent to 398
pence a share, below the average forecast of 423.6 pence.
Other real estate stocks suffered as well, with Land
Securities <LAND.L>, Hammerson <HMSO.L>, and Liberty
International <LII.L> losing 3.9 to 6 percent.
Cable & Wireless <C&W.L> was the biggest blue-chip faller,
down 8 percent as a disappointing outlook with its full-year
results and market talk of share selling by directors weighed.
The telecoms group posted full-year earnings up 36 percent
on Thursday following an operating overhaul and acquisition
synergies, and some analysts said the forecast growth for 2010
was weaker than hoped.
ICAP <IAP.L> shed 7.2 percent, extending the previous
session's sell-off following confirmation after the market close
on Wednesday that the firm's founder and chief executive,
Michael Spencer, had sold a chunk of shares in the inter-dealer
broker.
There were just five blue chip risers with Capita <CPI.L>,
Unilever <ULVR.L>, Astrazeneca <AZN.L>, Tullow <TLW.L> and
Lonmin <LMI.L>, up between 0.1 and 1.8 percent.
(editing by John Stonestreet)
