* FTSE 100 falls 1.8 pct by midday
* Commodity stocks hit by worries of slowing demand
* Banks down on tough outlook
(For more on the financial turmoil, click on [])
By Dominic Lau
LONDON, Oct 23 (Reuters) - Britain's top share index fell
for the third day in a row by midday on Thursday, as commodity
stocks sank on growing fears of slowing demand and banks slipped
on worries over more bad loans and a tough outlook.
By 1046 GMT, the FTSE 100 <> was down 73.34 points, or
1.8 percent at 3,967.55 in a volatile session after swinging
between a high of 4,084.70 and a low of 3,932.88. The UK
benchmark fell 5.6 percent over the previous two sessions, and
is down more than 38 percent for the year.
Energy stocks fell on concerns of a global recession. BP
<BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L>, Tullow Oil
<TLW.L> and Cairn Energy <CNE.L> shed between 1.7 and 5.8
percent.
Weaker metal prices weighed on miners, with BHP Billiton
<BLT.L>, Anglo American <AAL.L>, Rio Tinto <RIO.L>, Xstrata
<XTA.L>, Lonmin <LMI.L>, Vedanta Resources <VED.L> and
Antofagasta <ANTO.L> losing between 4.6 to 11 percent.
BHP warned market volatility that has hit shares in the
sector would not end soon. It reiterated short-term demand was
faltering in China, but longer-term prospects were intact for
the country to expand its huge appetite for raw materials.
[]
Rio Tinto also said it had cut its outlook for Chinese
economic growth in 2009, to 8-9 percent, but expects commodity
prices to bounce back some time next year. []
"We had retail sales which were as bad as expected but the
industrial new orders in the eurozone were a lot weaker than
expected, and also the Daimler <DAIGn.DE> numbers were worse
than expected," said Mark Priest, a senior trader at ETX
Capital. "That sort of knocks all the confidence."
British retail sales volumes fell in September and the
annual rate of growth slowed to its weakest in 2-1/2 years,
showing consumers struggling as the economy slows.
[]
Eurozone industrial new orders weakened much more than
expected in August, strengthening expectations that the economy
fell into recession in the third quarter, while Daimler lowered
its full-year revenue and profit forecast after third-quarter
operating profit plunged by two-thirds. []
Banks also took a hammering. Switzerland's Credit Suisse
<CSGN.VX> said it had further cut its exposure to illiquid U.S.
assets as it confirmed its hefty third-quarter loss, but warned
the rest of the year would be tough.
Royal Bank of Scotland <RBS.L>, HBOS <HBOS.L>, Barclays
<BARC.L>, Standard Chartered <STAN.L> and HSBC <HSBA.L> sagged
between 1.5 and 7.9 percent.
Overnight, U.S. stocks tumbled to five-year lows as
investors grappled with an increasingly dire outlook for the
global economy following a raft of disappointing profits and
outlooks from major U.S. companies.
RETAIL BLUES
Marks & Spencer <MKS.L>, Next <NXT.L> and Kingfisher <KGF.L>
dropped 0.7 to 3 percent. Among mid-caps, Debenhams <DEB.L> sank
6.9 percent and Home Retail <HOME.L> languished 7.2 percent.
A report by Verdict Research said UK spending on non-food
items is set to fall in the run-up to Christmas for the first
time in more than a decade. []
Index heavyweight Vodafone <VOD.L>, however, bounced 3.1
percent after losing 7.9 percent on Wednesday.
Drugmaker GlaxoSmithKline <GSK.L> advanced 0.8 percent. The
company stepped up its drive to acquire more biotech assets by
buying the rights to an Austrian biotech company's experimental
therapeutic vaccines against Alzheimer's disease. []
Peers AstraZeneca <AZN.L> and Shire <SHP.L>, deemed more
insulated to the financial crisis and slowing growth, were also
in demand.
Hedge fund Man Group <EMG.L> topped the list of FTSE 100
gainers, jumping 4.5 percent as investors continued to welcome
recent positive performance from its flagship AHL managed
futures strategy.
(Additional reporting by Simon Falush; Editing by Quentin
Bryar)
