* FTSE 100 down 0.2 percent
* Banks fall back after Monday's surge
* Miners, energy also retreat, but defensives firmer
By Simon Falush
LONDON, Aug 3 (Reuters) - Britain's top share index fell
slightly by midday on Tuesday as banks and commodity stocks
retreated after sharp gains the previous session.
By 1103 GMT, the FTSE 100 <> was 9.43 points or 0.2
percent lower at 5,387.68 following a 2.7 percent gain on Monday
to a three-month closing high.
Banks which surged on Monday after forecast-beating results
from HSBC <HSBA.L> were the biggest drag as investors questioned
whether the gains may have been overdone.
"There's a bit of nervousness and profit taking and there's
a feeling that even if results are pretty solid, which they
should be, the gains are already priced in," said Giles Watts,
head of equities at City Index.
Barclays <BARC.L> fell 0.4 percent ahead of its results on
Thursday, though Standard Chartered <STAN.L> bucked the trend,
gaining 1.7 percent.
HSBC, which gained 5.3 percent on Monday, lost 1.7 percent
after RBS cut its recommendation on Europe's largest bank to
"hold" from "buy", saying it expects pre-impairment profit
growth and margins to struggle until U.S. short-term rates rise.
Trade was fairly muted with many market participants on
holiday and as investors awaited results later in the week
including Rio Tinto <RIO.L> and Aviva <AV.L> as well as
Barclays.
The FTSE 100 is down 7.5 percent since mid April when fears
on sovereign debt in the euro zone prompted a sharp sell-off in
equities. Some analysts remain concerned that underlying
vulnerability in the economy will continue to weigh on the
market.
"There have been some good results which has led to a
tradeable rally but there are brooding clouds overhanging the
economy and I would use any rallies to prudently trim
positions," said Jeremy Batstone-Carr, head of research at
Charles Stanley.
ACTIVITY SLOWS
Supporting this view, construction sector activity in
Britain slowed markedly in July to a four-month low as firms'
confidence about the future deteriorated due to concerns about
public spending cuts, a survey of purchasing managers showed on
Tuesday. []
Miners and energy stocks also retreated as commodity prices
fell back slightly.
BP <BP.L> fell 0.5 percent, Tullow Oil <TLW.L> lost 0.7
percent and Rio Tinto <RIO.L> shed 0.5 percent.
A batch of U.S. data was scheduled for release on Tuesday,
including June's personal income and personal consumption
numbers at 1230 GMT and pending home sales, due at 1400 GMT.
South African investment bank and asset manager Investec
<INVP.L> was the top loser, down 5.5 percent after it said it
would raise up to $180 million by issuing new shares as it aims
to shore up its capital base. []
Centrica <CNA.L> was the top performer on the index, up 1.9
percent boosted as Goldman Sachs lifted its earnings forecast on
the gas supplier and repeated its "buy" rating.
Other defensive stocks like supermarkets and tobacco firms
provided some support as investors rotated portfolios slightly
into companies seen as better positioned in tough economic
conditions.
Morrison Supermarkets <MRW.L> gained 0.4 percent and British
American Tobacco <BATS.L> added 1.2 percent.
(Editing by Jon Loades-Carter)
