Banks lead FTSE down

Weak banks pushed Britain's top shares lower on Friday, with the financial sector taking a knock after ratings agency Fitch downgraded Greece's credit rating, further fuelling fears the country will have to restructure its debt. On the upside, BP rose 2.7 percent in heavy trading, boosted by a contribution to cost of the Gulf of Mexico oil spill and upbeat broker comment.
The FTSE 100 ended down 7.50 points, or 0.1 percent, at 5,948.49, having hit a session high of 6,017.56. Fitch Ratings cut Greece's credit rating to 'B+', and put the country on rating watch negative. "(The index's decline is) basically down to the downgrade on Greece. There are rumours going around that they could be restructuring this weekend," Manoj Ladwa, senior trader at ETX Capital, said.
BP limited the FTSE 100's losses after it said Japanese trading house Mitsui & Co, a partner in the Macondo well, had agreed to pay $1.1 billion to the oil major towards the cost of the spill clean-up. "I think it is very significant because clearly now it means that BP can try and ensure that everybody else who is involved will also meet their obligations and their share of the costs," Societe General analyst Irene Himona said.
BP's share price rise was also underpinned by an upgrade to "buy" from Investec Securities, while RBC Capital Markets started coverage of the stock with an "outperform" rating. Banks were out of favour. Lloyds Banking Group fell 2.9 percent after Goldman Sachs cut its rating on the stock to "neutral".
Standard Chartered bucked the weak sector trend, climbing 1.1 percent, bolstered by a UBS upgrade to "buy". Mining stocks gave back early gains to end in negative territory, reflecting a deterioration in investor risk appetite. Randgold Resources, however, firmed 0.7 percent as Citigroup raised its target price for the precious metals miner. Elsewhere, engine maker Rolls Royce fell 1.9 percent as a Qantas Airways flight returned to Bangkok after pilots were forced to shut down one of the aircraft's engines.
Imperial Tobacco shed 1.3 percent as newspapers reported the group's Altadis unit is set to reduce the price of brands in Spain, one of its biggest markets, to compete with a price cut by rival Phillip Morris International. Clothing retailer Next shed 1.9 percent, with traders citing a read-across from US peer Gap Inc, which slashed its full-year profit outlook on rising cotton costs. Meanwhile, Associated British Foods climbed 3.1 percent as Exane BNP Paribas raised its rating to "outperform".
Martin Dobson, head of trading at Westhouse Securities, was relatively bearish about the short-term prospects for the FTSE 100, which is struggling to break out of a 250-point range stretching back to the beginning of April. "There's not a lot of trading that's actually going on in the markets. It feels very quiet," he said. "It feels very tentative above the 6,000 level... It doesn't feel as if the market at the moment can sustain a rally above 6,000." He added that investors will be anxious to see whether the Office for National Statistics on Wednesday revises its preliminary growth estimates for first-quarter UK GDP of +0.5 percent.