UK stocks: Britain's top shares fell back in early trade on Monday,led by weaker miners and energy issues as commodity prices continued their slide on global recession fears. * FTSE 100 index down 0.5 pct; off earlier lows below 5,000 * Miners,oils lead decliners as commodity prices drop * Banks mixed; short squeeze helps RBS,Lloyds However,a rally from earlier falls by selected banking issues helped haul the FTSE 100 index back from an opening drop below the 5,000 level. At 0802 GMT,the UK blue chip index was down 24.25 points,or 0.5 percent at 5,042.59,having bounced from an early session low at 4,974.03. The FTSE 100 index gained 0.4 percent on Friday but had still shed 5.6 percent over a turbulent week. Precious metals miners Fresnilo and Randgold Resources were the biggest FTSE 100 fallers,down 7.5 percent and 3.9 percent respectively,as gold extended its losses after sliding a record $100 an ounce on Friday,as safe haven seekers abandoned the precious metal in favour of the dollar and U.S. Treasuries. Chilean copper miner Antofagasta was also a leading FTSE 100 faller,down 4.0 percent as copper prices neared 14-month lows in Shanghai trade as fears of renewed recession raised worries over falling demand. JPMorgan Cazenove sees further 10-15 percent downside risk for UK miners with equity and commodity prices moving in tandem,though it thinks that stronger balance sheets should support valuations above 2008/09 levels. We still believe the foundations of the supercycle are in place and therefore see this sell-off as an opportunity in waiting,the broker said in a note. Integrated oils fell back too as crude prices dropped further after falling to six-week lows on Friday,with Royal Dutch Shell losing 2.2 percent. BP ,however,lost a more modest 0.4 percent. The board of its Russian joint venture TNK-BP approved an additional $1.25 billion dividend payout to shareholders,a spokesman for the company said on Sunday. Banks were mixed as a sector,with part-state-owned lenders Lloyds Banking Group and Royal Bank of Scotland the top two blue chip gainers,both up 1.8 percent as short sellers got squeezed out. But weakness in global banking heavyweight HSBC ,off 0.7 percent,kept the sector lower,with uncertainty over the euro zone sovereign debt crisis remaining paramount. The initial sell-off on the open is being reversed as banks are looking cheap at these levels especially if some of the European debt on their books does get wiped out as suggested,said Mic Mills,head of electronic dealing at ETX Capital. European leaders were working on new ways to stop the fallout from the euro zone sovereign debt crisis exacting more damage on the world economy at the weekend. EU leaders,under pressure from tumbling markets,might agree on bolder steps to ringfence heavily indebted Greece,Portugal and Ireland but investors expressed concern about a lack of detail about the proposals. If the rumours are to be believed then the move would finally give investors what they have been asking for,will likely give markets a short-term shot in the arm,James Hughes,Senior Market Analyst at Alpari UK,said. However,the news of this deal would be in contrast to comments from IMF chief Christine Lagarde who believes,like many,that this money is just not available,Hughes added. No important British data will be released on Monday so investors will be focused across the Atlantic on the Chicago Fed index for August,due at 1230 GMT,and August U.S. new home sales,due at 1400 GMT.
