FTSE falls as jitters resurface, politics weigh

* FTSE 100 down 1.1 percent

* Commodity stocks weak as metal oil prices retreat

* Banks hit as sentiment ebbs

By Simon Falush

LONDON, May 11 (BestGrowthStock) – Weakness in miners and energy
stocks on a fall in commodity prices and a drop in bank shares
saw Britain’s top share index retreat on Tuesday, with political
uncertainty also weighing.

By 0816 GMT, Britain’s FTSE 100 (.FTSE: ) index was down 58.00
points at 5,329.42 after rising 5.2 percent on Monday, its
biggest one-day percentage gain in almost 18 months.

Weak miners weighed on the index, sapped by heavy falls in
metal prices pressured by dollar strength, and after Chinese
inflation edged up to an 18-month high in April, raising
concerns about potential monetary tightening measures.
[ID:nTOE64A01U] [ID:nTOE64A01L]

Rio Tinto (RIO.L: ), Xstrata (XTA.L: ), Lonmin (LMI.L: ), Anglo
American (AAL.L: ), Kazakhmys (KAZ.L: ) and BHP Billiton (BLT.L: )
fell 1.7-3.4 percent.

On Monday, stocks had moved higher following hefty falls in
previosus week as investors breathed a sigh of relief after a
global agreement on an emergency rescue package, worth about $1
trillion, to help alleviate the euro zone debt crisis.

“Yesterday we saw short covering following the Ecofin
meeting at the weekend but we are back to reality now,” said
Jeremy Batstone-Carr, head of research at Charles Stanley.

“I have seen the gains described as a sucker’s rally and I
tend to agree. There are just too many uncertainties out there
for a lasting recovery.”

Energy companies were under pressure as crude (CLc1: ) fell
towards $76 per barrel. BG Group (BG.L: ), BP (BP.L: ), Royal Dutch
Shell (RDSa.L: ) and Tullow Oil (TLW.L: ) lost 0.7-1.8 percent.

Lingering political uncertainty weighed on market sentiment
with the Liberal Democrats pursuing a deal to form a government
with one of the two larger political parties after an
inconclusive election that forced Prime Minister Gordon Brown to
say he would resign. [ID:nLDE6492UW]

Brown’s announcement disrupted efforts by the centre-right
Conservatives to broker a deal with the Liberal Democrats after
the country’s first inconclusive election since 1974.

Banks which saw stellar gains on Monday, retreated.

Barclays (BARC.L: ), HSBC (HSBA.L: ), Standard Chartered
(STAN.L: ) and Lloyds Banking Group (LLOY.L: ) fell 1.8-3 percent.

Royal Bank of Scotland (RBS.L: ) saw the sharpest losses, down
4.7 percent hit by a downgrade to ‘hold’ from ‘buy’ by Deutsche
Bank.

RBS was also pressured after ABN AMRO NV, now owned by the
British state-owned bank, agreed to forfeit $500 million to
settle charges it conspired to violate U.S. sanctions and bank
secrecy laws. [ID:nLDE64A07G]

Insurer Aviva (AV.L: ) bucked the market trend, however,
gaining 0.6 percent after topping forecasts with a 5 percent dip
in life and pensions sales in the first quarter.

On the economic front, British house price growth
accelerated in April, a survey indicated, with new buyers lured
by a favourable interest rate outlook and expectations of a
post-election bounce.

The Royal Institution of Chartered Surveyors said its
monthly house price balance rose to +17 last month from an
eight-month low of +9 in March. Economists polled by Reuters had
forecast a steady reading. [ID:nAHLAGE61I]

Meanwhile, British retail sales fell at their sharpest
annual pace in more than a year in April, although the figures
were skewed by the timing of Easter, the British Retail
Consortium said.

The BRC said the value of sales last month was 2.3 percent
lower than a year ago, when measured on a like-for-like basis.
That was the steepest fall since December 2008, when Britain’s
economy was in recession. [ID:nAHLAGE61G]

British industrial and manufacturing output numbers for
March, due at 0830 GMT, were seen up 0.3 and 0.4 percent
respectively, month-on-month.

Stocks

(Reporting by Simon Falush; Editing by Dan Lalor)

FTSE falls as jitters resurface, politics weigh