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* FTSE 100 flat
* Banks slide
* easyJet falls after downgrade
* William Hill jumps following merger talks
By Kit Rees
LONDON, Oct 10 UK shares steadied on Monday as a
drop in banking shares and easyJet capped gains, though
mid cap bookmaker William Hill jumped after merger
The blue chip FTSE 100 index was flat in percentage
terms at 7,046.97 points by 0920 GMT, though it remained close
to a year-high and outperformed the broader continental market.
The FTSE 100 posted a gain of 2.1 percent last week,
supported by a plummet in sterling which helped the index's
international, dollar-earning firms as well as exporters.
Banking stocks were the biggest fallers, with the FTSE 350
banking index dropping 0.7 percent, mirroring
losses in European banks which dropped on worries about troubled
lender Deutsche Bank, which failed to strike a deal
with the U.S. Department of Justice over the misselling of
Barclays, Lloyds and Royal Bank of
Scotland all fell between 2.2 to 2.8 percent.
"We're coming up to the earnings results for Q3 for most of
the major banks in the UK...and that's going to cover the large
part of the post-referendum period, so it's really going to be
the first indication that we get as to the health of the banks
in terms of earnings," Henry Croft, research analyst at Accendo
Citigroup cut its target price on Lloyds, citing the
possibility of a dividend cut.
Analysts also said that concerns the British government
might not get a return on its 3.6 billion pound stake in
thelender was also weighing on Lloyds.
Ratings downgrades also weighed on the shares of easyJet
, which dropped 2.3 percent after target price cuts from
Liberum and Societe Generale, the latter of which also cut its
rating on the stock to "sell".
The budget airline issued a profit warning last week, hit by
security concerns and foreing exchange problems.
However, betting firm William Hill rose 2.2 percent after
confirming merger talks with Canada's Amaya.
"While there are some positives, such as a possible
diversification away from UK retail and the appointment of a
capable new top manager ... we are still not reassured by the
higher exposure to non-regulated markets that a deal would
bring," Roberta Ciaccia, analyst at Berenberg, said in a note,
adding that the poker market also remained under pressure.
Likewise mining companies rose as metals prices were boosted
after Chinese markets returned following a week-long holiday,
with Randgold Resources gaining 1.5 percent.
(Reporting by Kit Rees)