Weaker banks, dented by lacklustre results from US peers, dragged Britain's top share index to the lowest close in a week on Friday while commodity stocks also retreated on a gloomy macro-economic outlook. Strength from BP, up 1.3 percent, limited losses. Its stricken oil well showed no sign of leaking after a new cap stopped crude from flowing into the Gulf of Mexico for the first time since April.
The FTSE 100 ended down 52.44 points or 1 percent at 5,158.85, having closed 0.8 percent lower at 5,211.29 on Thursday. US consumer sentiment dropped to its lowest level in 11 months, data showed, while consumer prices fell for a third straight month in June, heightening concerns about deflation. This helped bearish investors maintain the upper hand, with the index down for the third consecutive day after it had rallied for six sessions. It still eked out a 0.5 percent gain for the week.
"There's a tussle between bulls and bears," said Andrew Bell, chief executive of Witan Investment Trust. "There's been mixed data and we are going through a wobbly period and the market is consolidating after a week of gains, but there's been some good news from companies," Bell said, noting some European companies had issued positive guidance.
However investors were unimpressed with US results. Conglomerate General Electric Co, Bank of America Corp and Citigroup Inc reported second-quarter earnings that beat expectations, but the stocks slid after revenues fell from the prior year. The two banks also posted profit declines.
The US investment bank results put the most pressure on Barclays, which relies more than its British rivals on its investment banking arm. It fell 5.2 percent while Lloyds Banking Group lost 3.7 percent. Other financial stocks were also lower with hedge fund Man Group and insurer Prudential off 2.8 and 2.4 percent respectively. Miners retreated from earlier strength, hurt by weaker metal prices. Gold miners Randgold Resources and African Barrick Gold were among the hardest hit, both down 3.2 percent with gold falling to its lowest in a week.
Among gainers, luxury group Burberry added 1.1 percent after it said it is to acquire its Chinese retail franchise operations for 70 million pounds ($107.5 million), with Evolution Securities raising its target price. And Invensys rose 1.3 percent as UBS upped its rating for the engineer to "buy" from "neutral" ahead of a trading update due on July 28. Trading has been thin all week, and UBS said that investors are reluctant to commit before Greek debt restructuring is out of the way and ahead of European bank stress tests due for publication next week. UBS said it expects the FTSE 100 to trade between a range of 4,820 to 6,250, with the latter as its year-end target, a 21 percent upside from its current level.