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London - Banks led a minor retreat on Britain's FTSE 100 on Wednesday, hurt by uncertainty over the UK government's push for tighter regulation and Europe's debt crises.
Banks fell ahead of a speech by British finance minister George Osborne later on Wednesday, when he is expected to argue for a ring fencing of banks' retail business from so-called casino banking activities in the biggest shake-up of the UK banking system since the 1930s.
Barclays shed 1.2%.
Bruce Packard, analyst at Seymour Pierce, said: "The implications for shareholders remain unclear ... (But) if the idea works, it would make the whole sector more resilient in a crisis, and a more investable proposition for equity investors."
The failure of euro zone ministers to reach an agreement over Greek debt also weighed on the sector.
Peter Clark, chief strategist at Ingenious Asset Management, which has around £1bn of funds under management, said he would advise against allocating funds into domestic banks.
"With the levels of debt in the economy and everybody desperately trying to repay debt and restore their balance sheets, it is not a great environment for a bank."
He said the global debt situation left him cautious on the market, "favouring value over growth for the developed markets especially cheap multinational blue chips" such as AstrZeneca and Vodafone on historically low PEs and high yields.
Recovery jitters
Britain's FTSE 100 was down 9.27 points, or 0.2% at 5 793.86 by 1041 GMT, having closed 0.5% higher on Tuesday.
Mixed jobs data reinforced the uncertain outlook for Britain's shaky economic recovery.
"If the economy doesn't expand in the way that the government is hoping it will, you have to start to get a little bit concerned that provisions for bad debt will begin to pick up again," Ingenious's Clark said.
US stock index futures pointed to a weaker open on Wall Street on Wednesday ahead of inflation and manufacturing data with investors looking for further clues as to the health of the World's biggest economy.
Back on London's blue chip index, credit checking agency Experian fell 2.8% with traders citing a report on Bloomberg that said the three major credit-reporting bureaus, which also includes Equifax Inc. and TransUnion LLC, are being threatened with stricter supervision.
Glencore, down 2.8%, will be barred from bidding for embattled miner ENRC for six months under UK takeover rules, after the commodities trader said it was not actively considering a bid.
Integrated oils dragged in tandem with crude, as the dollar strengthened on European worries and after top consumer the United States reported rising gasoline stockpiles.
The fall in the price of oil spurred interest in travel companies, with International Consolidated Airlines up 1.3% and TUI Travel rising 1.1%.
Elsewhere, British Land rose 1.4% on news the firm's and Blackstone Group's plan to build UBS' new European headquarters in central London will go ahead after a bid to preserve the location as a heritage site failed.
British technology firm Smiths Group added 0.4% helped by a bullish note from UBS, and grocer J Sainsbury added 0.5% as it reported a pick-up in quarterly sales growth.
Only one blue-chip stock, 3i Group, will trade ex-dividend on Wednesday, clipping just 0.10 points off the FTSE 100 index.
