Britain's top shares fell on Friday as recovery concerns resurfaced, with miners dipping under the weight of China's move to raise banks' reserve requirements in an attempt to head off inflation, according to Reuters. By 1149 GMT, the FTSE 100 was down 55.44 points, or 0.9 percent, at 5,968.44, having closed 0.4 percent lower on Thursday than Wednesday's 31-month closing high. Miners fell in tandem with base metals prices after China's central bank raised banks' required reserves by another 50 basis points, effective Jan. 20, its seventh increase since early 2010. "The selling in mining stocks was a bit of a knee jerk reaction to the move by China, with investors fearing moves by China to curb spiralling inflation could suppress metal demand," Joshua Raymond, market strategist at City Index, said. The announcement knocked London-listed Mexican precious metals miner Fresnillo, down 3 percent, despite the firm posting record annual output figures. Banks fell as investors' appetite for riskier stocks faded and as they booked profits, with the sector having gained more than 7 percent earlier this week. Traders also cited comments by Naoyuki Shinohara, deputy managing director of the International Monetary Fund, on the euro zone's debt problems knocking sentiment. "Shinohara says recent efforts from European authorities to soothe investor scepticism about the debt crisis have been ineffectual," Jonathan Sudaria, a trader at Capital Spreads, said. "Most traders would probably agree with Shinohara. Whilst this week's auctions have been relatively successful, the bond buying by the ECB has been seen as a short-term 'time-buying' measure, not the conclusive solution required." DEFENSIVE GAINS Defensive stocks such as utilities and tobacco firms were in vogue, with investors switching out of more cyclical shares as worries over the state of the global recovery resurfaced. Utilities International Power and Scottish & Southern Energy added 1.9 and 0.4 percent respectively, while British American Tobacco added 0.3 percent. British factory gate inflation rose faster than expected in December. That will likely concern the Bank of England as consumer price inflation is already more than a percentage point above its 2 percent target and is forecast to rise towards 4 percent in coming months. Wall Street futures pointed to a lower open, with investors awaiting a raft of U.S. data, including December consumer prices and December retail sales figures; December industrial output numbers; the January preliminary Reuters/University of Michigan consumer sentiment survey; and November business inventories. British chip designer ARM, which recently announced a tie-up with Microsoft and has been the subject of persistent M&A talk, rose 6.8 percent following U.S. peer Intel's fourth-quarter results overnight. Elsewhere, artificial hip and knee maker Smith & Nephew (S&N) climbed 0.6 percent after the Daily Telegraph newspaper reported privately owned U.S. orthopaedics group Biomet was set to begin informal talks about a potential 15 billion pound ($23.6 billion) merger.
