* Banks weighed on by Dubai debt exposure worries
* Commodity stocks under pressure
* Tesco down as Q3 sales growth disappoints
By Tricia Wright
LONDON, Dec 8 (Reuters) - Britain's top share index fell 1.6
percent on Tuesday, led down by banks on fresh worries over
Dubai debt exposures and caution ahead of Wednesday's UK
pre-budget report and with Tesco <TSCO.L> hurt by disappointing
Q3 numbers.
By 1237 GMT the FTSE 100 index <> was down 84.61 points
at 5,226.05, near its lows for the session.
Weakness in banking shares was the biggest drag on blue chip
sentiment with investors concerned over their exposure to
Dubai's debt, and worries about a possible windfall tax on banks
being introduced by finance minister Alistair Darling in his
pre-budget report on Wednesday.
Royal Bank of Scotland <RBS.L> slid 8.8 percent, also
impacted by a WestLB downgrade to "sell" from "reduce", with
HSBC <HSBA.L>, Barclays <BARC.L>, Standard Chartered <STAN.L>
and Lloyds Banking Group <LLOY.L> down 0.8 to 3.5 percent.
"The weak German industrial output numbers ... and the size
of losses facing Nakheel, a unit of Dubai World, have hit
sentiment causing jitters across the market," said Manoj Ladwa,
senior trader at ETX Capital.
Troubled Dubai property developer Nakheel made a first-half
loss of 13.4 billion dirhams ($3.65 billion) as revenue fell and
it wrote down the value of land and property, according to a
report published on Tuesday. []
Miners also weighed heavily on the blue chips. Xstrata
<XTA.L> was among the hardest hit, down 2.4 percent after the
firm said it is taking a $1.9 billion charge for restructuring
its nickel business after metal prices fell, and is taking
further charges of $545 million for copper smeltering operations
in Canada and Chile. []
Peers Eurasian Natural Resources <ENRC.L>, Lonmin <LMI.L>,
Rio Tinto <RIO.L> and BHP Billiton <BLT.L> shed 1.1 to 2.7
percent.
Energy stocks were under pressure, hurt by a 0.4 percent
drop in the price of crude <CLc1>, with Royal Dutch Shell
<RDSa.L>, BP <BP.L> and BG Group <BG.L> off 0.4 to 1.6 percent.
"The market seems to have run out of steam generally," Ladwa
said.
RETAIL GLOOM
Tesco shares lost 2.2 percent as the world's third-biggest
retailer said sales at British stores open at least a year rose
2.8 percent, excluding gasoline sales and VAT sales tax, in the
13 weeks to Nov. 28.
That was slightly down on the 3.1 percent reported in the
second quarter and shy of the average forecast of 3 percent in a
Reuters poll of 12 analysts. []
Other food retailers fell back on the news, with Sainsbury
<SBRY.L> shedding 1.4 percent and Wm. Morrison Supermarkets
<MRW.L> losing 0.7 percent.
Retail sales values rose at their slowest annual pace last
month since August, held back by food sales where a fall in
inflation led to their weakest performance in more than two
years, a British Retail Consortium survey showed.
[]
Media group Pearson <PSON.L> was the top FTSE 100 riser, up
1.8 percent after U.S. peer McGraw-Hill <MHP.N> said it expects
a better year for all businesses in 2010. []
Shares in WPP <WPP.L>, the world's largest advertising
group, added 1.4 percent.
German industrial output unexpectedly fell in October,
official data showed on Tuesday, pointing to a slowdown in the
economy's recovery in the final quarter of this year.
[]
British industrial output failed to grow in October,
disappointing expectations for a further expansion and raising
doubts over the strength of any recovery in the fourth quarter.
[]
House prices, however, rose 1.4 percent month-on-month in
November, according to the latest survey by the Halifax, much
stronger than the 0.5 percent rise predicted. []
The FTSE 100 index has gained about 51 percent from a
six-year low hit in March, though it is still 3.3 percent below
its level of mid-September 2008 before the collapse of Lehman
Brothers.
(Editing by Greg Mahlich)
