FTSE hits 5-week closing low; oils, banks weigh

* FTSE 100 closes down 1.1 pct

* Commods weak; China worries hit demand outlook

* Banks lower; Spain’s BBVA reports rising bad loan ratio

* FOMC meeting eyed

By Tricia Wright

LONDON, Jan 27 (BestGrowthStock) – Britain’s top share index hit a
five-week closing low on Wednesday, led down by energy stocks
and banks ahead of the conclusion of a U.S. Federal Reserve
policy meeting.

The FTSE 100 (.FTSE: ) closed down 59.38 points, or 1.1
percent, at 5,217.47, its lowest close since Dec. 18. The index
gained 0.3 percent on Tuesday, snapping a four-session losing
streak.

“The major story which is moving everything is this China
situation and the possible moves to stop the overheating
economy,” said James Hughes, market analyst at CMC Markets.

Energy stocks were the biggest drag on the index, as the
outlook for demand for crude (CLc1: ) was clouded by China’s
heightened efforts to rein in soaring credit growth.

BG Group (BG.L: ), BP (BP.L: ) and Royal Dutch Shell (RDSa.L: )
fell 1.3 to 2.4 percent.

Tullow Oil (TLW.L: ) was among the biggest FTSE 100 fallers,
off 4.6 percent after it launched a $1.6 billion share sale to
pay for the development of assets in Uganda.

China’s largest bank ICBC said on Wednesday it had stopped
rolling over some loans after a surge in credit at the start of
the year, evidence that banks may finally be heeding a
government-directed clampdown.

Against a background of weaker metals prices, the mining
sector was also on the back foot, with Fresnillo (FRES.L: ),
Xstrata (XTA.L: ) and Anglo American (AAL.L: ) shedding 3.1 to 3.7
percent.

BANKS PRESSURED

Banks were in the doldrums after Spain’s second-largest bank
BBVA (BBVA.MC: ) reported a rise in bad loans.

Barclays (BARC.L: ), HSBC (HSBA.L: ), Royal Bank of Scotland
(RBS.L: ), Standard Chartered (STAN.L: ) and Lloyds Banking Group
(LLOY.L: ) lost 0.8 to 5.2 percent.

Man Group (EMG.L: ) was the biggest blue-chip faller, down 6.5
percent after Credit Suisse cut its estimates and target price
for the hedge fund manager, in part to reflect weak returns from
its flagship AHL fund. [ID:nLDE60Q0QV]

There were nerves ahead of the conclusion of the latest
two-day Federal Reserve Open Market Committee meeting, although
a decision on U.S. interest rates and the central bank’s
quantitative easing policy is not due until 1915 GMT.

U.S. President Barack Obama’s State of the Union speech
later in the day will also be closely watched by the market.

With investor appetite for risk muted, defensive issues
found favour. Cigarette firms British American Tobacco (BATS.L: )
and Imperial Tobacco (IMT.L: ) rose 1.2 and 0.5 percent,
respectively.

Cobham (COB.L: ) gained 1.1 percent, helped by positive
comment from Morgan Stanley in a sector review, with the broker
saying the firm is its top pick among European defence players.

Upbeat broker sentiment also gave SABMiller (SAB.L: ) a lift,
up 1.6 percent, with Credit Suisse reiterating its “outperform”
rating on the brewer after a meeting with management.

Caterer Compass Group (CPG.L: ) fell after going ex-dividend.

Highlighting the stiff headwinds buffeting the British
economy, data from the Confederation of British Industry showed
retail sales volumes falling unexpectedly this month, at their
sharpest annual rate in five months. [ID:nLDE60Q19N]

Investing Advice

(Editing by Will Waterman)

FTSE hits 5-week closing low; oils, banks weigh