FTSE flat, banks fall, insurers rise, China eyed

* Investors await China policy decision

* Broker recommendations move Prudential and StanChart

* Rolls Royce falls, traders cite FT report on engine costs

By David Brett

LONDON, Dec 9 (BestGrowthStock) – Britain’s top shares were flat on
Friday, with insurers boosted by bullish broker comment, while
Standard Chartered was hit by a broker downgrade, as investors
looked ahead to the monetary policy announcement in China.

By 0844 GMT, the FTSE 100 (.FTSE: ) was down 1.38 points at
5,806.58, following Thursday’s 0.2 percent gain.

Banks (.FTNMX8350: ) were the worst performing sector on
London’s blue chip index, giving up some of the previous
session’s gains and led lower by Standard Chartered (STAN.L: ).

Standard Chartered fell 2.2 percent after BofA Merrill Lynch
downgraded the Asia focused bank to “neutral” from “buy”,
calling its trading update on Thursday “disappointing relative
to expectations”.

UK investors remained cautious as China’s leadership meets
to review the world’s fastest-growing major economy amid
speculation policy makers will tighten monetary policy this
weekend, potentially in the form of a interest rate rise.

“The market has been expecting that we would see additional
tightening,” Mike Lenhoff, chief strategist at Brewin Dolphin
Securities in London said.

“On the other hand China’s going to be pursuing a very
active fiscal policy which is something the markets haven’t
really yet been focusing on.”

China, overnight, said imports and exports were much
stronger than expected in November. Investors will watch for
inflation data, due out on Saturday, the most important
predictor of monetary policy at this juncture in the economic
cycle. [ID:nTOE6B901S] [ID:nTOE6B203E]

COMMODITIES WAIN

In London, mining shares (.FTNMX1770: ) and energy stocks
(.FTNMX0530: ) also weighed on the index, highlighting investor
uncertainty.

However, miner Anglo American (AAL.L: ) gained 1.5 percent
after saying it will start building early next year one of its
biggest growth projects, the Minas Rio iron ore operation in
Brazil, after getting a key licence from the government.

Elsewhere, Rolls-Royce (RR.L: ) fell 2 percent with traders
citing a Financial Times report that the engine maker could face
costs of $500 million over the next few years to deal with the
consequences of an explosion in one of its Trent 900 engines,
according to some aviation experts.

Insurers were a good support for the FTSE, with Prudential
(PRU.L: ) up 1.8 percent after Morgan Stanley raised its rating on
the firm to “overweight” from “equalweight”.

Resolution (RSL.L: ) added 0.7 percent after Morgan Stanley
raised its target price for the insurance buyout specialist.

Equities continue to show resilience in the face of
macroeconomic uncertainty, as investors back the ability of
companies to grow profits and yields, even in austere times.

“The steadiness of the market has been surprising but I
think that reflects the growing confidence and conviction in the
outlook for next year,” Brewin Dolphin’s Lenhoff said.

“This is backed up by the U.S., which now has fiscal as well
as monetary policy geared toward to expansion which i guess will
lead to upward revisions (to estimates).”

The FTSE has risen 5 percent since its recent low on Nov.
30, and is up 7.2 percent in 2010.
(Editing by Jon Loades-Carter)

FTSE flat, banks fall, insurers rise, China eyed