FTSE lower as banks, telecoms retreat

By Simon Falush

LONDON (BestGrowthStock) – Worries about European debt slowing growth and pessimism on corporate earnings pushed Britain’s top share index lower by midday on Tuesday, with banks weighing ahead of U.S. peer results.

Telecoms stocks were also down after Cable & Wireless Worldwide (CWP.L: ) said it would be hit by government cuts.

By 1104 GMT, the FTSE 100 (.FTSE: ) was 28.45 points lower at 5,119.83, having fallen 0.2 percent on Monday.

The blue chip index is down for a fifth consecutive session, though it is still up 4.1 percent this month, recovering after a 13 percent fall last quarter.

Nagging concern on Europe’s debt situation bubbled to the surface once again after Hungary sold less of its debt than expected.

Investors were also nervous ahead of a big batch of U.S. earnings due on Tuesday with Goldman Sachs (GS.N: ) and Bank of New York Mellon Corp (BK.N: ) reporting ahead of the Wall Street open, while tech giants Apple (AAPL.O: ) and Yahoo (YHOO.L: ) will report after the New York closing bell.

British banks, which have been in sharp retreat for several sessions, were lower ahead of the fresh earnings news from their U.S. peers. Barclays (BARC.L: ) fell 2.7 percent, while Lloyds Banking Group (LLOY.L: ) lost 1.3 percent.

“It is so sentiment bound at the moment we’ll have to get good numbers (from U.S. companies) to break out of the ranges, and the government debt worries, and stress tests (due out on Friday) are acting as a drag,” said James Hughes, market strategist at CMC Markets.

He said the FTSE 100 200-day moving average of 5,320 is acting as a stiff resistance point while there is support at 4,980.

CUTS HURT

Cable & Wireless Worldwide (CWP.L: ) was the top blue chip faller, down 17 percent after it warned that trading had been hit by a significant slowdown in the UK public sector following the government’s emergency budget in June.

This warning prompted a 4.2 percent fall in peer BT Group (BT.L: ) on fears that it too would be hit by the cuts in government spending.

Mobile telephone operator Vodafone (VOD.L: ) was also in retreat, down 1.4 percent after ING cut its rating for the firm to “hold” from “buy” in a sector review, citing valuation grounds.

Miners were the main support to the index, supported by firmer metal prices. Xstrata (XTA.L: ) and Rio Tinto (RIO.L: ) both gained 1.1 percent.

High-end fashion group Burberry (BRBY.L: ) was also a strong performer, up 1.1 percent after Investec reinstated its coverage on the company with a “buy” rating.

A key index of British factory orders rose to its highest in almost two years in July, but export orders appeared to weaken, the CBI’s industrial trends survey showed on Tuesday.

Britain’s public sector net cash requirement rose unexpectedly to its highest level since records began in April 1984, official data showed on Tuesday.

The Office for National Statistics said on Tuesday the public sector posted a net cash requirement of 20.905 billion pounds ($31.75 billion), up from 20.213 billion pounds in June last year and well above economists’ forecasts for a fall to 15 billion pounds.

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(Editing by Sharon Lindores)

($1=.6583 Pound)

FTSE lower as banks, telecoms retreat