Weak banks and miners pull FTSE lower

By Jon Hopkins

LONDON (BestGrowthStock) – Weak banks and miners, beset by doubts over the health of the global economic recovery, pulled down Britain’s top share index on Monday, while BP (BP.L: ) rose on media reports it is seeking a strategic investor.

By the close, the FTSE 100 (.FTSE: ) index was down 14.56 points, or 0.3 percent at 4,823.53, having ended 0.7 percent higher on Friday.

With U.S. markets closed on Monday for the Independence Day holiday, the FTSE 100 traded only 41.9 percent of its average 90-day volume.

“It’s been a pretty dull session, with little for direction without Wall Street’s lead, and weakness in miners and banks pinning us back,” said Mic Mills, head of electronic trading at ETX Capital.

Miners were the big fallers as investors worried about the demand outlook and the stability of the global recovery after disappointing jobs data from the U.S. on Friday, and figures from China on Thursday showing a cooling of manufacturing growth.

Among the worst off, Eurasian Natural Resources (ENRC.L: ), Xstrata (XTA.L: ), BHP Billiton (BLT.L: ) and Antofagasta (ANTO.L: ) shed 2.2 to 2.9 percent.

Banks fell ahead of the publication later this month of European stress tests on the sector, with Barclays (BARC.L: ) and Royal Bank of Scotland (RBS.L: ) the two biggest fallers in the sector, down 2.9 and 2.8 percent.

However, UBS said in a note that running a credit stress test along the lines of the U.S. tests of 2009 would see all the major European banks pass.

French economy minister Christine Lagarde said on Saturday that the test results, to be published on July 23, will show that “banks in Europe are solid and healthy.”

London’s blue chip index lost 3.9 percent last week after shedding 13.4 percent in June with investor doubts mounting on worries over the sustainability of the global recovery.

Britain’s services sector expanded at its slowest rate for 10 months in June after concern about the impact of a public spending squeeze led to a record monthly drop in confidence, a survey showed on Monday.

BP BOUNCES

Embattled oil major BP (BP.L: ) was the top performer in the FTSE 100, up 3.5 percent on optimism that the plugging of the leaking well in the Gulf of Mexico is now only about a month away, and amid media reports that the company was seeking a strategic investor to secure its independence.

The weekend newspaper reports said BP was looking for a shareholder willing to buy a 5 to 10 percent stake at a cost of up to 6 billion pounds ($9.06 billion). BP’s rivals Exxon (XOM.N: ), Total (TOTF.PA: ) and Royal Dutch Shell (RDSa.L: ) have all been touted as possible bidders, according to the reports.

Additionally, a report by a Kuwait newspaper said OPEC member Kuwait may buy some of BP’s (BP.L: ) Middle East and Asian assets as part of the British oil company’s attempt to raise funds and fend off takeover bids.

Elsewhere, Britain’s biggest clothing retailer Marks and Spencer (MKS.L: ) gained 2.6 percent ahead of a fiscal first-quarter trading update due on Wednesday.

M&S’s peer Next (NXT.L: ) added 1.3 percent.

Broker comment helped publisher Pearson (PSON.L: ) take on 2.4 percent as RBS raised its rating to “hold” from “sell” with an unchanged 865 pence price target, citing valuation grounds.

($1=.6624 Pound)

(Editing by Jon Loades-Carter; Graphics by Scott Barber)

Weak banks and miners pull FTSE lower