* FTSE 100 down 0.2 percent,
* Miners gain as dollar weakens
* Banks, defensive pharmaceuticals, tobacco stocks retreat
By Simon Falush
LONDON, Oct 14 (Reuters) - Britain's top share index fell
slightly on Thursday as banks retreated, outweighing some
strength from miners which were supported by firmer metal prices
as the dollar weakened further.
Mobile phone heavyweight Vodafone <VOD.L> also rose after an
upgrade from Nomura.
By 1126 GMT the FTSE 100 <> was 11.39 points, or 0.2
percent, lower at 5,735.96 after it gained 1.5 percent on
Wednesday, its best closing level since late April.
U.S. stock indexes hit their highest level in five months on
Wednesday amid stronger-than-expected earnings from JP Morgan
Cazenove and Intel and as the dollar tumbled to a 10-month low.
The strong earnings and weak dollar both helped metal prices
extend recent lofty gains, with copper reaching a new 27-month
high, which in turn prompted gains in miners. Xstrata <XTA.L>
gained 1.2 percent and Lonmin <LMI.L> added 0.7 percent.
African Barrick Gold <ABGL.L> led fallers, however, down 7.8
percent after it cut its 2010 production target for the second
time in three months. It said it uncovered fuel theft at its new
Buzwagi mine and suspended 40 percent of miners there.
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Equity strength and dollar weakness was also helped by
expectations that U.S. policy makers were preparing to inject
more cash into the economy.
"The Federal Reserve's open market operations are keeping
shorters out of the market, and while that keeps going, I don't
expect much more weakness," said Jeremy Batstone-Carr, head of
research at Charles Stanley.
Banks were the biggest drag on the index, with Barclays
<BARC.L> down 2.8 percent. Investors were concerned that other
banks might follow Standard Chartered <STAN.L> in launching
rights issues.
STANCHART SOLID
Standard Chartered, which saw sharp falls earlier in the
week, bucked the trend, adding 0.9 percent after Seymour Pierce
lifts its rating to "outperform" from "hold".
Vodafone provided the biggest single boost to the index,
gaining 1.5 percent after Nomura upgraded it to "buy" from
"neutral", citing positive earnings momentum.
Other stocks perceived as being resilient in the face of
economic hard times were weaker, however, as investors switched
to more cyclical stocks. Imperial Tobacco <IMT.L> was down 1.8
percent and drugmaker AstraZeneca <AZN.L> eased 0.2 percent.
ARM Holdings <ARM.L> was up 1.7 percent, lifted by strong
results from U.S. rival Intel.
No British data are due for release on Thursday, so
investors will look to U.S. September producer prices, August
international trade figures, and the latest weekly jobless
claims numbers to provide some macroeconomic direction.
September PPI is seen up 0.2 percent on the month, and ahead
3.7 percent year-on-year, after 0.4 and 3.1 percent increases
respectively for wholesale inflation in August.
"We'll see what happens in the U.S., if there is poor data
and it's shrugged off, it's another bullish sign," said Yusuf
Heusen, senior sales trader at IG index.
Technical levels were also being closely watched, with the
next significant resistance at 5,795, a peak level hit three
times in April just after the previous peak at 5,835, said
Michael Hewson, markets analyst at CMC Markets.
(Editing by Michael Shields)
