Banks, miners drag FTSE down; China data weighs

* FTSE 100 falls 0.8 pct

* Risk-sensitive banks slide

* Commodity stocks weak on dimmer demand outlook

By Tricia Wright

LONDON, July 1 (BestGrowthStock) – Britain’s top share index fell on
Thursday after data showing China’s growth was slowing hurt
risk appetite, putting pressure on banks and miners.

By 1117 GMT, the FTSE 100 (.FTSE: ) was down 40.58 points, or
0.8 percent, at 4,876.29, having hit its lowest level since
September 2009 earlier in the day. It gained 0.1 percent on
Wednesday.

The blue-chip index lost more than 13 percent in the
second-quarter, the worst fall since the third-quarter of 2002
when the dot.com boom collapsed, but index compilers FTSE Group
said BP (BP.L: ) accounted for almost a third of this.

“The market generally is in bearish mode. The old concerns
that have been rattling around for weeks basically remain in
place: What’s happening in the euro zone? What’s happening in
China in particular?,” said Peter Dixon, economist at
Commerzbank.

The pace of Chinese manufacturing growth slowed in June as
government steps to cool the property market and curb bank
lending combined with a faltering global recovery to dampen
sentiment. [ID:nTOE66001K]

Metals prices fell as investors worried about the demand
outlook, putting pressure on mining stocks, with Lonmin (LMI.L: )
and Xstrata (XTA.L: ) among the worst off, down 2.2 percent and
1.7 percent, respectively.

Risk sensitive banks were out of favour as investors rushed
to exit more cyclically geared positions.

Barclays (BARC.L: ) was the top loser in the sector, down 2.7
percent. Analysts cut earnings estimates for Barclays after the
bank said late on Wednesday that investment banking conditions
have weakened in the last two months.

Analysts said that the growing doubt about prospects for
global recovery were tempering expectations on the forthcoming
earnings season.

“As we head up towards the Q2 reporting season, I think
investors are a bit concerned about what we’re going to see from
(this). The trend basically remains down and I can’t see any
reason for it to change in the near term,” Commerzbank’s Dixon
said.

INSURERS WANE

Insurers which are heavily exposed to the equity market also
fell, with Aviva (AV.L: ) and Prudential (PRU.L: ) both down 1.5
percent.

Among midcaps, Wellstream (WSML.L: ) was the top faller, down
10.6 percent after the British oil services firm warned an
expected second-half recovery would be slower after the BP oil
spill in the Gulf of Mexico caused uncertainty.

This weighed on large-cap peer Petrofac (PFC.L: ), which fell
1.9 percent.

Retail stocks were lower, with Next (NXT.L: ) down 2 percent
and Marks & Spencer (MKS.L: ) off 1.3 percent, as traders pointed
out that increased wages in China will put pressure on import
margins for clothing.

Hotel group Whitbread (WTB.L: ) and cruise operator Carnival
(CCL.L: ), which are heavily dependent on discretionary spending,
shed 2 percent and 1.7 percent, respectively.

Spain sold 3.5 billion euros of a 5-year bond on Thursday,
at the top end of the Treasury’s target amount, which analysts
said fared well even though ratings agency Moody’s had placed
Spain on review for a potential downgrade on Wednesday.
[ID:nLDE6600XY]

Domestically, a rebound in British manufacturing slowed from
a 15-year high in June as export order growth all but ran out of
steam, a survey showed on Thursday, suggesting the sector’s
recovery may have peaked. [ID:nLDE6600PT]

In terms of U.S. data, the latest weekly jobless claims, May
construction spending, June ISM, and May pending home sales
numbers are all due for release this afternoon, ahead of
Friday’s jobs report.
(Editing by Simon Jessop)

Banks, miners drag FTSE down; China data weighs