Weak commodities, banks lead Britain's FTSE lower

LONDON (Reuters) - London's top shares eased in early trade on Monday, dragged by weak mining stocks which tracked lower metal prices on concerns about China's stockpiles and diminished expectations for further stimulus measures for the U.S. economy.

At 0900 GMT, the FTSE 100 index was down 5.62 points, or 0.1 percent at 5,881.87. It gained 0.5 percent on Friday after better-than-expected U.S. February jobs data showed recovery in the world's largest economy was gaining momentum.

However, investors on Monday interpreted the jobs data as lowering the likelihood of more stimulus by the Federal Reserve, which meets later this week.

"With the U.S. appearing to be the only shining light sustaining markets at the moment there is deep concern amongst investors that the recent rally may well have run out of steam," said Mike McCudden, Head of Derivatives at Interactive Investor.

Heavyweight miners were the worst performing blue chips. Chilean copper miner Antofagasta shed 0.6 percent as copper prices fell. Concerns about oversupply in China took the momentum out of a three-day rally.

China, the world's top metals consumer, said copper imports remained surprisingly strong in February, with inflows of the industrial metal up 17 percent from January -- double a year earlier, raising stockpile concerns and dampening demand hopes.

Commodities and mining giant Glencore, which is currently bidding for Xstrata, was also under pressure, down 0.7 percent after the Sunday Telegraph said it was considering a 3.5 billion pound approach for Canada's biggest grain handler, Viterra.

Integrated oils were also weak, led by Royal Dutch Shell's 1.5 percent fall and tracking a lower crude price resulting from a weaker dollar.

Banks also suffered as investors shunned risk-sensitive stocks. Part-state-owned RBS was the worst off, down 1.7 percent.

Downgrades by Seymour Pierce analyst Bruce Packard on global heavyweight HSBC and emerging markets lender Standard Chartered also weighed on the sector. The two banks were cut to "hold" and "sell" respectively.

MAN DOWN

Among other financials, Man Group was the top blue chip faller, down 1.9 percent after HSBC Securities downgraded its rating to "neutral" from "overweight" and cut its target price and estimates for the hedge fund manager citing unfavourable risk/reward factors.

Elsewhere, engineering group GKN fell 0.9 percent after weekend press reports said the firm was in advanced talks to acquire Volvo's aerospace unit, which could cost it around 800 million pounds.

Among the blue chip gainers, real estate stocks stood out, led by Hammerson up 1.2 percent. The sector benefited from investors switching out of financials.

Oil services firm AMEC was the top FTSE 100 gainer, up 1.5 percent, supported by an upgrade in rating by Societe Generale to "buy" from "hold", with the broker lauding the firm's astute balance sheet management.

No British macroeconomic data will be released on Monday. Little is due all week aside from January trade numbers on Tuesday, and the latest unemployment data on Wednesday.

Across the Atlantic, after Friday's above-forecast U.S. February nonfarm payrolls data, investors only have the February employment index on Monday, due at 1400 GMT.

February's U.S. Federal budget will be released after the London close at 1800 GMT.

Source: http://news.yahoo.com/weak-commodities-banks-lead-britains-ftse-lower-102036962.html

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