Britain's top share index dips

Britain's top share index dipped 0.5 percent on Wednesday, with banks and miners taking a lashing as investors worried about higher interest rates and how a troubled US subprime mortgage market may hit the US economy.
The FTSE 100 closed down 31.7 points, or 0.48 percent at 6,527.6 but was well off its day's low of 6,496.4. The UK benchmark index has lost 1.4 percent so far this month.
European stocks also fell. "The undercurrent that's going through the market at the moment is the anxiety about interest rates," said Darren Winder, equity strategist. "We will live with this for a while longer, but fundamentally the market is still very attractive."
UK mortgage lender Northern Rock plunged 12 percent to top the FTSE 100 losers list and suffered its worst daily fall in over 10 years after the company cut its 2007 profit forecast, blaming a rise in funding costs following a series of interest rate rises.
"Northern Rock sent a shockwave down the spine. It is a warning that situation is getting worse. Interest rates are starting to bite," said Howard Wheeldon, senior strategist at BGC Partners.
The banking sector was the biggest loser, shaving nearly 19 points off the index as Alliance & Leicester lost 2.6 percent, HBOS dipped 2.5 percent and Standard Chartered shed 2.9 percent.
Royal Bank of Scotland fell 1.9 percent. The Financial Times said the RBS-led consortium competing with Barclays for control of ABN Amro may go ahead with its break-up bid for the Dutch bank, even if it cannot stop the sale of LaSalle, the Dutch's lender US subsidiary.
Man Group, the world's largest listed hedge fund, slumped 3.1 percent. Negative sentiment hit all FTSE 100 miners, which took about 13 points from the index, with Lonmin slipping 2.9 percent, Xstrata dipping 1.7 percent, Kazakhmys losing 2.9 percent and BHP Billiton falling 2.8 percent.
United Utilities, Severn Trent, Tate & Lyle, Yell Group and British Energy all fell after trading ex-dividend. Vodafone and BT Group bucked the trend, up 2.4 and 2.7 percent respectively, as traders said they benefited from investors switching into the relatively defensive telecommunications sector. The pharmaceuticals, which are also seen as a defensive plays, were also in demand.
AstraZeneca rose 2.9 percent to top the FTSE 100 gainers. The company reported positive findings from a phase two study of dapagliflozin, a treatment for diabetes, jointly development with Bristol-Myers Squibb. GlaxoSmithKline tacked on 1.2 percent.
Also on the upside, Morrison Supermarkets gained 2.1 percent as traders cited talk of stake building in Britain's fourth-biggest supermarket chain. One trader said tycoon Robert Tchenguiz was rumoured to be behind the stake-build. Both Morrison and Tchenguiz's office declined to comment. Rival supermarket chain Sainsbury advanced 0.7 percent to 577 pence on renewed market talk of a potential 610 pence a share bid for the company, traders said. ITV lifted from a Citigroup upgrade, up 0.9 percent.