* FTSE down 0.9 percent
* Miners fall as China raises banks' reserve requirements
* Banks under pressure as recovery concerns resurface
By David Brett
LONDON, Jan 14 (Reuters) - Britain's top shares fell on
Friday as recovery concerns resurfaced, with miners dipping
under the weight of China's move to raise banks' reserve
requirements in an attempt to head off inflation.
By 1149 GMT, the FTSE 100 <> was down 55.44 points, or
0.9 percent, at 5,968.44, having closed 0.4 percent lower on
Thursday than Wednesday's 31-month closing high.
Miners <.FTNMX1770> fell in tandem with base metals prices
after China's central bank raised banks' required reserves by
another 50 basis points, effective Jan, 20, its seventh increase
since early 2010.
"The selling in mining stocks was a bit of a knee jerk
reaction to the move by China, with investors fearing moves by
China to curb spiralling inflation could suppress metal demand,"
Joshua Raymond, market strategist at City Index, said.
The announcement knocked London-listed Mexican precious
metals miner Fresnillo <FRES.L>, down 3 percent, despite the
firm posting record annual output figures. []
Banks <.FTNMX8350> fell as investors' appetite for riskier
stocks faded and as they booked profits, with the sector having
gained more than 7 percent earlier this week.
Traders also cited comments by Naoyuki Shinohara, deputy
managing director of the International Monetary Fund, on the
euro zone's debt problems knocking sentiment. []
"Shinohara says recent efforts from European authorities to
soothe investor scepticism about the debt crisis have been
ineffectual," Jonathan Sudaria, a trader at Capital Spreads,
said.
"Most traders would probably agree with Shinohara. Whilst
this week's auctions have been relatively successful, the bond
buying by the ECB has been seen as a short-term 'time-buying'
measure, not the conclusive solution required."
DEFENSIVE GAINS
Defensive stocks such as utilities and tobacco firms were in
vogue, with investors switching out of more cyclical shares as
worries over the state of the global recovery resurfaced.
Utilities International Power <IPR.L> and Scottish &
Southern Energy <SSE.L> added 1.9 and 0.4 percent respectively,
while British American Tobacco <BATS.L> added 0.3 percent.
British factory gate inflation rose faster than expected in
December.
That will likely concern the Bank of England as consumer
price inflation is already more than a percentage point above
its 2 percent target and is forecast to rise towards 4 percent
in coming months.
Wall Street futures pointed to a lower open, with investors
awaiting a raft of U.S. data, including December consumer prices
and December retail sales figures; December industrial output
numbers; the January preliminary Reuters/University of Michigan
consumer sentiment survey; and November business inventories.
British chip designer ARM <ARM.L>, which recently announced
a tie-up with Microsoft <MSFT.O> and has been the subject of
persistent M&A talk, rose 6.8 percent following U.S. peer
Intel's fourth-quarter results overnight. []
Elsewhere, artificial hip and knee maker Smith & Nephew (S&N)
<SN.L> climbed 0.6 percent after the Daily Telegraph newspaper
reported privately owned U.S. orthopaedics group Biomet was set
to begin informal talks about a potential 15 billion pound
($23.6 billion) merger. []
(Editing by David Hulmes)
