Weak banks and miners drag FTSE down

By Tricia Wright

LONDON (BestGrowthStock) – Weak banks and miners, hampered by concerns over the health of the global economy, dragged Britain’s top share index lower early on Thursday, while defensive stocks were up as investors’ risk appetite waned.

By 0828 GMT (4:28 a.m. EDT), the FTSE 100 (.FTSE: ) was down 17.26 points, or 0.3 percent, at 5,236.26, after it ended down 17.50 points, or 0.3 percent on Wednesday, snapping a six session winning streak.

Miners extended the previous session’s falls after data from China showed a slowdown in economic growth in the second quarter.

Kazakhmys (KAZ.L: ), Xstrata (XTA.L: ) and Eurasian Natural Resources (ENRC.L: ) were the worst off, shedding 1.9 to 2.4 percent.

Annual gross domestic product growth in China, the world’s largest consumer of metals, moderated to 10.3 percent in the second quarter from 11.9 percent in the first quarter, slightly below forecasts of 10.5 percent growth.

Also darkening the mood were minutes of the Federal Reserve’s June meeting which showed officials were more concerned with the pace of the U.S. recovery.

Energy stocks slipped as the crude price fell back, with Royal Dutch Shell (RDSa.L: ) off 0.1 percent, and BP (BP.L: ) 0.4 percent lower.

U.S. lawmakers have added an amendment to an oil rig safety bill that, if passed, could stop BP obtaining new offshore oil leases because of its safety record, The Financial Times said.

BP was running a crucial test on Thursday on its ruptured Gulf of Mexico oil well that could staunch the flow of crude that has polluted the ocean and shoreline since April.

“At the moment it looks like it’s one of those ‘risk off’ days,” said Richard Hunter, head of UK equities at Hargreaves Lansdown, indicating that bullish sentiment has been knocked by the China slowdown news and the Fed’s outlook.

“Whilst the likes of Alcoa (AA.N: ) and Intel (INTC.O: ) for example in the U.S. have really kicked the earnings season off very strongly, there’s obviously concern on the banking front,” he said.

Banks fell, led by Barclays (BARC.L: ) and HSBC (HSBA.L: ), off 1.8 percent and 1.4 percent respectively.

Investors were waiting for second-quarter earnings from U.S. peer JPMorgan Chase & Co. (JPM.N: ) later in the session.

Among individual movers, BT Group (BT.L: ) shed 1.5 percent after Deutsche Bank cut its recommendation on the telecoms firm to “hold” from “buy” and trimmed its earnings estimates.

DEFENSIVES FAVOURED

Defensive stocks were in demand, with cigarette makers Imperial Tobacco (IMT.L: ) and British American Tobacco (BATS.L: ) up 0.7 and 0.8 percent respectively, while spirits group Diageo (DGE.L: ) put on 0.7 percent.

GlaxoSmithKline (GSK.L: ) rose 0.7 percent after U.S. health advisers recommended on Wednesday its diabetes drug Avandia should be allowed to stay on the market but with additional warnings, easing a threat of further costly litigation that could have resulted in a ban.

Peer Shire (SHP.L: ) put on 0.9 percent, as sector investors welcomed news from Swiss drugmaker Novartis (NOVN.VX: ), which raised its full-year sales goal.

Elsewhere, Experian (EXPN.L: ) was the top blue chip riser, up 2.5 percent, as the credit information company issued a “positive” first-quarter trading statement, leading JPMorgan Cazenove to repeat its “overweight” stance on the stock.

No domestic economic data is due for release on Thursday, but a key batch of U.S. data is due out this afternoon.

June U.S. producer price numbers, initial weekly jobless claims, and the July Empire State Index will all be released at 1230 GMT, with June industrial output and capital utilization numbers due at 1315 GMT, and the Philly Fed Index for July due at 1500 GMT.

(Editing by Hans Peters)

Weak banks and miners drag FTSE down