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Tuesday, November 16, 2010

Worst FTSE Fall Since August On Irish Debt Worries

* FTSE down 2.4 pct, steepest session fall in 3 months
* Banks, commod stocks hurt by Irish debt woes
* Rexam (REXMF:$4.9600,$0.0000,0.00%) rises 2.3 percent on results, sole bright spot

By Nia Williams
LONDON, Nov 16 (Reuters) - Britain's top share index recorded its biggest fall in three months on Tuesday as concerns over Irish government debt and the prospect of another euro zone bailout dragged banking and commodity-related stocks lower.

At the close the FTSE 100 was down 138.51 points, or 2.4 percent, at 5,681.90, its biggest daily fall since Aug. 11.

Banks were the worst hit sector, with Lloyds Banking Group (LYG:$4.20,00$-0.2000,-4.55%) and Standard Chartered (SCBFF:$28.9000,$-1.8000,-5.86%) shedding 4.7 percent and 4.4 respectively.

Ireland has so far resisted calls to request a state bailout, as Greece did in May, and insisted only its banks need assistance, despite government bond yield spreads blowing out to record levels in recent weeks.

"This will be a continual rollercoaster over the next few weeks. It's a broken record, but markets hate uncertainty," said James Hughes, analyst at CMC Markets.

"Metal prices and commodities are all going down on the back of the Irish story and fears of yet another euro crisis rearing its head. And no-one knows what sort of exposure the banks have got to Irish debt."

The Irish government is set to deliver a statement to parliament on the economy, most likely from Prime Minister Brian Cowen, at 1700 GMT on Tuesday, as euro zone finance ministers meet in Brussels to discuss the crisis. [ID:nLDE6AE2AI]

Elsewhere among financials Man Group (MNGPF:$4.6300,$0.0000,0.00%) was a big faller, off 4.4 percent, with traders saying that its flagship AHL fund was having a tough week.

Mining and energy stocks were also knocked by lingering fears of interest rate hikes in China, the world's largest commodities consumer.

As the UK market closed, U.S. indexes fell sharply, weighed down by similar concerns over Ireland.

Also weighing on confidence was weaker-than-expected data out of the United States where core producer prices recorded their largest decline in more than four years and November homebuilder sentiment was up less than expected. [ID:nN16114602] [ID:nN16103144]

Earlier, inflation in Britain rose unexpectedly to a four-month high in October. [ID:nAHLFME69P]

Rexam (REXMF:$4.9600,$0.0000,0.00%) was the standout FTSE 100 riser, adding 2.3 percent, after the drinks can maker said it expected its second half results to be in line with its expectations, prompting Seymour Pierce to repeat its "buy" rating on the stock.

Capita Group (CTAGF:$10.8500,$0.0000,0.00%) , up 0.5 percent, was also boosted by positive broker sentiment after Numis Securities lifted its rating on the outsourcer to "buy" from "add", ahead of a trading update on Thursday. [ID:nLDE6AF0UY]

Biopharmaceutical company AstraZeneca (AZN:$48.08,00$-0.3700,-0.76%) rose 0.4 percent as investors welcomed news it may sell its Astra Tech dental implant and medical devices business for some $2 billion, giving it more cash for share buybacks in 2011. [ID:nLDE6AF0O0]

(Editing by David Cowell)

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