* FTSE down 0.6 pct
* Miners track weaker metal prices
* Banks fall on economic growth fears
* U.S. dollar earners gain
By Jon Hopkins
LONDON Sept 1 (Reuters) - Britain's leading share index
remained weak by midday Monday, just coming off lows as Wall
Street's closure for the Labor Day holiday kept volumes thin,
with heavyweight mining issues easier as metal prices fell.
At 1149 GMT, the FTSE 100 <> index was down33.79
points, or 0.6 percent at 5,602.9.
"The market started off pessimistically but has calmed down
a tad as the worries over Hurricane Gustav's impact have
lessened," Mic Mills, trader at spread betting firm TradIndex
said.
"The major panic seems over but with oil flying around and
sterling getting a trouncing equities are understandably quiet,"
Mills added.
Miners fell tracking weaker metal prices as the U.S. dollar
rose again. BHP Billiton <BLT.L>, Anglo American <AAL.L>,
Xstrata <XTA.L>, Ferrexpo <FXPO.L>, Antofagasta <ANTO.L> and
Kazakhmys <KAZ.L> shed between 1.7 and 3.25 percent.
Rio Tinto <RIO.L> eased 1.5 percent. The president of
Chinese aluminium maker Chinalco said the group may increase its
minority stake in the miner if market conditions are right, but
has no timetable for such a move.
Energy stocks were weak, with a rise in crude prices of more
than $1 balanced by the shut down in the U.S. Gulf of nearly all
offshore oil output and a host of flood-prone coastal refineries
ahead of Hurricane Gustav making its landfall.
Cairn Energy <CNE.L>, BG Group <BG.L> and John Wood Group
<WG.L> shed between 1.6 and 2.1 percent.
Petrofac <PFC.L>, however, bucked the trend, up 2.5 percent.
The oil services firm and Mubadala Petroleum Services Company
LLC announced plans to set up a joint venture company, Petrofac
Emirates LLC.
ECONOMY WOES WEIGHS ON BANKS
Banks fell as comments from Chancellor Alastair Darling over
the weekend sparked fresh concerns over the UK economy. Darling
said that the country's economic downturn was likely to be
deeper and last longer than originally feared and it might turn
out to be the worst for 60 years.
"The outlook for the UK economy over the next 12 months is
pretty grim without a shadow of doubt. Whether it will be as bad
as Darling said it could be is another matter," said Peter
Dixon, UK economist at Commerzbank.
Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, HSBC
<HSBA.L>, HBOS <HBOS.L>, Lloyds TSB <LLOY.L> and Standard
Chartered <STAN.L> all lost between 0.5 and 1.75 percent.
Among Europan banks, Commerzbank <CBKG.DE> fell after
agreeing to buy Dresdner Bank from Allianz <ALVG.DE> in a $14.5
billion all-Germany deal that will break the country's banking
mould and cost 9,000 jobs.
London Stock Exchange <LSE.L> shed 1.3 percent. The
Financial Times said the bourse will introduce on Monday deep
fee cuts and incentives for traders in the latest sign Europe's
exchanges are ratcheting up efforts to defend themselves against
a wave of new entrants in equities trading.
Enterprise Inns <ETI.L> lost 3.6 percent after recent
negative broker comment and ahead of earnings news in the UK
pubs sector this week. The firm's blue chip status is also in
doubt ahead of next week's FTSE indexes reshuffle.
U.S. dollar earners featured among the minority FTSE 100
gainers as the currency moved higher again after a recent lull.
Intercontinental Hotels <IHG.L> added 1.3 percent,
AstraZeneca <AZN.L> gained 0.7 percent, and Wolseley <WOS.L>
put on 1.3 percent.
(Editing by Greg Mahlich)
