By Dominic Lau
LONDON, March 13 (Reuters) - Britain's top share index slid
1.5 percent on Thursday on fears of more credit market ructions
and as the euphoria of this week's central bank cash injection
wore off, while record oil prices added to investor gloom.
The FTSE 100 <> ended down 84.0 points at 5,692.4, but
well off its day's low of 5,628.9 after credit rating agency
Standard & Poor's said an end to subprime-related writedowns was
now in sight for large financial institutions.
Banks led the decline, all falling as investors feared the
sector would suffer further fallout due to degradation in credit
markets. Barclays <BARC.L> shed 2.2 percent, Royal Bank of
Scotland <RBS.L> lost 4.6 percent, HSBC <HSBA.L> dropped 2.3
percent and HBOS <HBOS.L> slipped 2.8 percent.
The UK benchmark index gained 2.6 percent in the previous
two sessions on the move by the U.S. Federal Reserve and other
major central banks to unlock strained credit markets, but is
still down more than 11 percent for the year due to spiralling
fears of a U.S. recession.
"We are working up towards March 18 (the Fed's next
rate-setting meeting), and a Fed cut will not be enough," said
Howard Wheeldon, senior strategist at BGC Partners.
"We might be talking about Fed supporting another collateral
based action and certainly the $200 billion we have seen this
week may need to be $400 billion, or even $600 billion. Fear is
breeding on itself. It's all about fear."
Europe shares also ended down but pared losses, while the
U.S. dollar plunged below 100 yen for the first time in over a
decade and hit a record low versus the euro.
Miners also suffered on slowing global demand, despite U.S.
gold futures hitting a $1,000 an ounce. BHP Billiton <BLT.L>,
Rio Tinto <RIO.L>, Anglo American <AAL.L> and Lonmin <LMI.L>
were down between 0.6 and 1.9 percent.
Kazakh copper producer Kazakhmys <KAZ.L> dropped 2 percent
after saying it had received no takeover proposal from rival
Eurasian Natural Resources <ENRC.L>, which said the day before
it had held preliminary talks with the Kazakh miner. Kazakhmys
soared 20 percent on Wednesday.
XSTRATA, UNILEVER SHINE
Xstrata <XTA.L> outperformed the sector, up 1.8 percent on
market talk that Brazilian mining group Vale <VALE5.SA> had
clinched a deal to buy commodity trader Glencore's stake in
Xstrata at 42 pounds a share.
Oil shares fell, despite crude prices <CLc1> hitting $110 a
barrel. BP <BP.L> shed 2.1 percent and Royal Dutch Shell
<RDSa.L> slipped 1.3 percent.
British Airways <BAY.L> and easyJet <EZJ.L> both were down
nearly 5 percent on concerns over higher oil prices.
Unilever <ULVR.L> advanced 3.2 percent after rival Nestle
<NESN.VX> surprised investors by raising its outlook, saying the
year had started strongly and it expected growth in 2008 to be
similar to last year.
Bid talk in Scottish & Southern Energy <SSE.L>, which rose
2.5 percent, boosted the utility sector. International Power
<IPR.L> gained 0.5 percent, United Utilities <UU.L> put on 0.7
percent and National Grid <NG.L> added 1.6 percent.
British building products retailer Wolseley <WOS.L> dropped
6.3 percent and hit a record low after Goldman Sachs downgraded
the stock to "sell" from "neutral" and cut its price target.
Traders also said ABN AMRO had downgraded the stock to "sell"
from "hold".
(Additional reporting by Rebekah Curtis and Michael Taylor;
Editing by David Cowell)
