* FTSE falls 0.3 percent
* Libya unrest crimps investors appetite for risk
* U.S. data prompts rebound in commodity stocks late on
By David Brett
LONDON, Feb 22 (Reuters) - Britain's top share index closed
lower on Tuesday as troubles in the Middle East clouded
sentiment, but bumper consumer confidence figures from the U.S.
spurred a late rally and boosted commodity stocks.
The FTSE 100 <> closed down 18.04 points or 0.3 percent
lower at 5,996.76, having finished at a two-week closing low on
Monday.
"The 6,000-level will be a hard one to hold in the
short-term until the situation in the Middle East has a little
bit more direction," Martin Dobson, head of trading at Westhouse
Securities, said.
Muammar Gaddafi vowed to die in Libya as a martyr in an
angry television address on Tuesday, as rebel troops said
eastern regions had broken free from his rule in a burgeoning
revolt. []
"There is probably more risk on the downside but the FTSE
might hold better because of the gold and oil price being
stronger, with its commodity focus," Dobson said.
The turmoil in the region and the threat of unrest spreading
has hit stocks such International Consolidated Airlines <IAG.L>
and travel firm TUI Travel <TT.L>, whose businesses are directly
exposed to the subsequent price pressures.
Both Brent <LCOc1> and U.S. crude oil <CLc2> rallied to
2-1/2 year highs on concerns the revolt in Libya could spread to
other major oil producers in the Middle East and North Africa.
Retailers were also weaker with Sainsbury <SBRY.L> down 1.5
percent and Argos and Hombase owner Home Retail <HOME.L> off 1.0
percent, as commodity price pressures show no sign of easing.
Banks <.FTNMX8350> were mainly weaker as risk appetite
remained largely off the table for investors. But Royal Bank of
Scotland <RBS.L>, which reports results on Thursday, rose 2.3
percent.
LATE RALLY
London's blue chips, however, rebounded off the session low
of 5,926.55 after U.S. consumer confidence rose in February to a
three-year high. []
The improved optimism over the health of world's biggest
economy fuelled demand for mining <.FTNMX1770> and energy
<.FTNMX0530> stocks as confidence grew over the demand outlook
for commodities.
The data from U.S. helped offset concerns of political
unrest in Libya and the wider North Africa and Middle East
region would derail the global economic recovery.
The FTSE volatility index <.VFTSE>, a barometer of investor
anxiety, is up sharply on the week as investors have responded
to the troubles.
Back on the downside, defence firm BAE Systems <BAES.L> was
the biggest blue chip casualty, down 4.3 percent on concerns
more UK defence contracts will be cancelled to meet the British
coalition government's goal of slashing military spending.
Defence-related engineer Smiths <SMIN.L> was also hit hard,
down 1.1 percent. []
Michael Hewson, market analyst at CMC Markets, said the
mounting tensions in the Middle East and North Africa could
tempt investors to test the FTSE support levels at 5,920/30 from
the July 2010 lows at 4,790.
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Graphic on FTSE approaching key support levels:
http://r.reuters.com/xun28r
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(Editing by Hans Peters; Graphic by Scott Barber)
