* FTSE 100 index down 1.7 percent at midday
* Falls below 5,000 for the first time since Nov 2009
* Banks, oils fall on euro zone debt concerns
By Joanne Frearson
LONDON, March (Reuters) - Britain's index of leading shares
fell below the key 5,000 level on Friday for the first time
since November 2009, as euro zone sovereign debt concerns
weighed on sentiment, with banks and oil stocks hit hardest.
By 1121 GMT, the FTSE 100 <> had fallen 81.04 points,
or 1.7 percent, to 4,992.09.
The index has lost more than 14 percent since fears
escalated about the euro zone sovereign debt crisis in mid-April
and is down 7.8 percent so far this year.
Banks, which have been hard hit by the sovereign debt
crisis, continued their slide from the previous session with
HSBC <HSBA.L>, Royal Bank of Scotland <RBS.L> and Standard
Chartered <STAN.L> down 2.7 to 3.7 percent.
The sector was also struggling after the U.S. Senate, on
Thursday night, approved a sweeping Wall Street reform bill for
financial regulation. Changes proposed threaten to constrain the
banking industry and reduce its profits for years to come.
[]
The inability of euro zone leaders to agree on policy on the
debt crisis has heightened investors' nerves this week,
contributing to a 5.3 percent fall in the index since Monday.
"It is the uncertainty that makes it that much more
difficult, while a long-term investor can say there are some
reasonable valuations, in the short term it does not count for a
huge amount," said Tim Rees, fund manager at Insight Investment.
"In the short term there is an element of uncertainty that
prevents one from feeling confident that the bad news is priced
in the market."
On Friday, Germany is poised to approve the lion's share of
a $1 trillion safety net for financially troubled euro zone
nations as an EU task force looks to toughen regulations within
the bloc blighted by a debt crisis that has cast a pall over
global economic health. []
OILS SLIP
Energy stocks slipped back as crude <CLc1> fell below $70
per barrel on worries that Europe's debt crisis could hurt
global economic growth and slow energy demand.
BG Group <BG.L> and Royal Dutch Shell <RDSa.L> slipped 1.2
percent and 1.1 percent respectively.
BP <BP.L> lost 3.6 percent after U.S. politicians accused
the company of covering up the true extent of the oil spill in
the Gulf of Mexico.
However, the mining sector held up relatively well, given a
boost by a positive note from HSBC.
The broker reiterated its "overweight" position on Rio Tinto
<RIO.L> which added 0.4 percent.
Xstrata <XTA.L> rose 1 percent after HSBC upgraded it to
"neutral" from "underweight".
(Editing by Erica Billingham)
