* FTSE down 0.1 pct
* Banks weak ahead of Irish stress test at 1530 GMT
* Retailers suffer after downbeat update from Mothercare
* Miners gain, Randgold up after update
By David Brett
LONDON, March 31 (Reuters) - The FTSE 100 failed to hold
earlier gains on Thursday, weighed down by weakness in banks and
retailers, while energy and mining stocks rose as analysts urged
investors to buy companies with earnings growth outside the UK.
London's blue chip index <> was down 7.27 points, or
0.1 percent, at 5,941.03 by 1050 GMT, having risen 0.3 percent
on Wednesday.
The index has risen 6 percent from its 2011 low at 5,591.59
on March 15, rebounding from sharp falls after Japan's March 11
earthquake, political troubles in the Arab world and the
eurozone debt crisis.
Banks <.FTNMX8350> fell with traders citing their exposure
to a sluggish domestic economy. Uncertainty over Europe's debt
problems weighed on sentiment, ahead of the results of Irish
banking stress tests and restructuring. []
Concerns over the eurozone crisis have intensified this
week, highlighted by a spike in Portuguese 10-year government
bond yields to fresh lifetime highs after the country's budget
deficit missed EU-agreed targets. []
UK retailers Next <NXT.L> and Kingfisher <KGF.L> fell 1.9
and 1.5 percent respectively, after Mothercare <MTC.L> became
the latest UK retailer to warn on its future profits.
[]
Electricals retailer Dixons <DXNS.L> had warned on profits
on Wednesday. [].
"The overall general trend is that the FTSE is split in two,
with companies with largely foreign earnings driving the market
higher and the companies with largely UK-focused businesses
struggling," Andrew Gibson, head of research at Galvan said.
COMMODITY GAINS
Energy <.FTNMX0530> and mining <.FTNMX1770> stocks were
among the top performers with analysts urging investors to buy
into sectors exposed to growth outside the UK.
Citing a trough in a Chinese lead indicator, Gerard Lane,
strategist at Shore Capital Stockbrokers said the data suggested
the pace of slowdown in China was moderating, which could prompt
a switch back towards assets backed by emerging market growth.
"As a result (of China's slowdown moderating) the
underperformance seen in the first quarter of those stocks with
a high degree of emerging market exposure should come to an
end," he said.
"Likewise the mining sector that performed well in the
second half of 2010, and has eased back, should start to pick up
market leadership."
Randgold Resources <RRS.L> gained 5.8 percent after it said
group production for 2011 was expected to increase by more than
70 percent over 2010.
Miner Vedanta <VED.L> rose 1 percent on hopes its deal for
Cairn India <CAIL.BO> would soon be ratified, which analysts
said would be earnings accretive for Vedanta in the first year.
Goldman Sachs also urged investors to look for growth in
emerging markets. "We believe that the growth/inflation balance
should improve in emerging markets. The early part of the
tightening cycle is over in emerging markets and the growth
momentum is likely to accelerate for the rest of the year."
Elsewhere, chip designer ARM Holdings <ARM.L> climbed 1.3
percent, boosted by a Bank of America Merrill Lynch upgrade,
while TUI Travel <TT.L>, Europe's biggest tour operator, rose
1.3 percent as it assuaged investors' fear over the impact on
its business of the unrest in Egypt and Tunisia. []
Back on the downside, Vodafone <VOD.L>, the world's largest
mobile operator by revenue, shed 0.9 percent after it said it
would pay $5 billion to buy out Essar Group from its Indian
joint venture. []
International Power <IPR.L> slipped 1.4 percent after
JPMorgan expressed concerns over potential consensus downgrades
and limited newsflow.
Technical constraints also limited the market's earlier
advance.
"On a more long term scale the 5,975 level remains the area
capping any gains on the upside, and has done since early in
March," James Hughes, senior market analyst, at Alpari UK, said.
(Editing by Jane Merriman)
