Weaker banks outweigh popular gold mining stock to drag Footsie down

FTSE: 6,060.09 (–2.81) Mid-250: 11,833.94 (+36.17) Small Cap: 3,290.76 (+8.07)BRITAIN'S LEADING share index closed marginally lower yesterday, as weaker financials prevailed over a mining rally inspired by upbeat economic data from China.

Banks and insurers were weaker as concerns over Europe’s debt situation and the precariousness of global recovery remained in focus.

Lloyds Banking fell 1.6 per cent, while Barclays, which kicks off the reporting season with results today, shed 0.1 per cent.

Data suggested Portugal headed back into recession in the last quarter of 2010.

“The yield on Portugal’s 10-year government bond reached a new high above 7 per cent, and Spain’s yield ticked higher, reminding the market the European debt crisis is by no means over,” Angus Campbell, head of sales at Capital Spreads, said.

Traders also cited technical factors for holding back Britain’s FTSE 100, after gaining some 3 per cent in February.

“After the big run-up, we have seen since the end of January a phase of consolidation is arguably overdue,” Yusuf Heusen, senior sales trader at IG Index, said.

Miners rose as Chinese economic data showed a smaller-than-expected trade surplus in January.

African Barrick Gold was up 2.9 per cent. Traders also cited talk that Chinese inflation could come in lower than expected, easing fears of more interest rate rises in the world’s biggest consumer of commodities.

International Consolidated Airlines shed 1.6 per cent as brokers cut target prices for the airline after last week’s warning from European peer Air France-KLM.

India-focused Essar Energy gained 2.7 per cent as BofA Merrill Lynch started coverage of the stock with “buy”.

Oil services blue-chip Petrofac, up 2.5 per cent, got a boost from acquisition moves in the sector.

Invensys and Weir rose 3.4 and 4 per cent respectively, with traders citing an interview in the Financial Times quoting Siemens’ chief financial officer – saying the German conglomerate was interested in making acquisitions – as helping lift engineering blue-chips.

Mid-cap energy services firm John Wood jumped 13.9 per cent as General Electric bought one of its units.

Exillon Energy rose 15 per cent after saying an independent study led to a 74-per cent increase in its estimated oil reserves. – (Reuters)