Britain's top shares were lower in early deals on Monday, with concerns over global growth outweighing hopes of near-term stimulus measures from major central banks.

At 10:00 SA time, the FTSE 100 index was down 16.26 points, or 0.3 percent, at 5,830.85 having shed 0.1 percent on Friday, edging further away from four-month highs after posting a 1 percent gain overall last week.

“To push on substantially from here, we are going to have to see a big rush in from investors who feel they are missing the (equities) boat, and of course there is all this background noise about central bank intervention, co-ordinated or otherwise,” said David Morrison, markets strategist at GFT Global.

Data on Monday showed that Japan's economy expanded 0.3 percent in April-June, half the pace expected, sparking worries over the strength of the recovery as a rebound in consumer spending loses momentum and Europe's debt crisis weighs on worldwide demand.

Concerns that a global economic slowdown will impact demand for commodities hit energy stocks and miners, also dragged down by copper prices that fell for a fourth session.

Oil services firm Petrofac was the biggest FTSE 100 loser, dropping 5 percent as a cautious outlook statement offset an above-forecast jump in first-half profit, with the group flagging up delays in contracts coming up for tender.

Early volume in Petrofac was fairly strong, at 45 percent of the 90-day daily average in the first hour of trading, with overall FTSE 100 volume at 4.4 percent of the 90-day daily average as the summer holiday lull continues.

Broker downgrades weighed on a number of blue chips.

Gas distributor Centrica fell 0.7 percent as Credit Suisse cut its rating to “neutral”; Whitbread shed 0.9 percent as Deutsche Bank cut to “hold”, and GlaxoSmithKline lost 0.4 percent on a Jefferies downgrade.


Overall losses for equities were limited, however, by the growing expectations of monetary stimulus.

Late on Friday, the president of the San Francisco Federal Reserve, John Williams, said the Fed should launch a fresh round of bond-buying to lower the US unemployment rate more quickly, fuelling speculation that the central bank could soon unveil more quantitative easing.

Banks were the strongest FTSE 100 performers, led by Standard Chartered, up 1.4 percent, rallying further after sharp falls last week on a probe over whether it improperly hid transactions tied to Iran.

The lender and New York state regulators discussed a settlement amount to resolve the inquiry, according to sources familiar with the situation, even as it prepares for a hearing to defend its New York license.

Technical analysis of the FTSE 100 index remained positive.

“Since breaking out above key level resistance over a week ago, the FTSE has moved steadily toward its key upside objective at 5,992.24,” said James A. Hyerczyk, Analyst at Autochartist.

Support had been established at 5,819.00 and at two lower levels, he said. - Reuters