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REFILE-Miners and banks send FTSE into retreat

Published 08/04/2009, 12:39 PM
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(Corrects paragraph 1 to read Tuesday instead of Wednesday; adds dropped word 'lower' in second paragraph)

* FTSE falls a day after touching highest level for 2009

* Miners under pressure tracking metals, but energy gains

* Standard Chartered falls on $1.7 bln fundraising plan

By Simon Falush

LONDON, Aug 4 (Reuters) - Weakness in miners and banks, dented as Standard Chartered announced a fundraising, sent Britain's top share index 0.2 percent lower on Tuesday, retreating from a 2009 high hit the previous session. The FTSE 100 closed 11.09 points lower at 4,671.37, after ending at 4,682.46 on Monday, its highest closing level since the collapse of Lehman Brothers in early October 2008.

The index also rose to an intraday high for 2009 of 4,710.23 on Monday, and has gained 35 percent since hitting a six-year trough in March.

"When you've had such a strong run since March and after such a strong July, you can't expect to keep cracking on," said David Buik, senior partner at BGC. "It's healthy to have a pull-back."

Banks were broadly lower as sentiment on the sector cooled after Standard Chartered announced a surprise 1 billion pounds equity fundraising, though it posted a better than expected 10 percent increase in its first-half profit.

Standard Chartered fell 7.5 percent, the heaviest blue-chip faller, HSBC lost 1.1 percent as investors booked profits after strong gains following results on Monday.

But Barclays rose 2.2 percent to 329.2 pence as Deutsche Bank upped its share price target to 400 pence from 369 following results on Monday.

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Ahead of results due later in the week, Royal Bank of Scotland added 0.5 percent, while Lloyds Banking Group fell 1.2 percent.

The index pared losses after data showed U.S. home sales rise at a faster than expected pace in June, but volumes traded were thin, with just 80 percent of the average of the last 90 trading days transacted.

"I expect the market to bounce around like a cork in a bath until October but it should rise towards the end of the year as long as Q3 earnings don't disappoint," Buik said."

MINERS RETREAT

Mining stocks were in retreat, tracking a pullback in metal prices after Monday's rally.

Rio Tinto, BHP Billiton, Antofagasta and Kazakhmys shed between 1.5 and 4.4 percent.

Xstrata dropped 2.1 percent as the Anglo-Swiss miner warned hopes of a quick recovery may be premature after its first-half profit dropped sharply and as it rebuffed calls by shareholders of proposed merger partner Anglo American to pay a premium.

Anglo American shares were 2.6 percent weaker.

Insurers were also lower. Legal & General was the heaviest blue-chip faller, down 6.7 percent, after it halved its interim dividend to conserve cash.

Selected defensives were supported as risk appetite ebbed and flowed. British American Tobacco rose 1.4 percent while Imperial Tobacco added 1.8 percent.

Energy companies were the main support for the index, recovering from early losses after crude edged back into positive territory.

Royal Dutch Shell, BG Group, Tullow Oil and Cairn Energy added between 0.3 and 2.6 percent.

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On the economic front, a survey showed on Tuesday that the rate of decline in Britain's construction sector eased to its slowest in 16 months in July, as new orders fell at their slowest rate in 17 months.

The Bank of England's monthly two-day rate-setting meeting begins on Wednesday. (Editing by Greg Mahlich)

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