Banks and miners drag FTSE down

By Dominic Lau

LONDON (Reuters) - The top share index shed 1.05 percent on Friday for its first weekly fall in a month, as a hefty loss in U.S. insurance giant AIG (AIG.N: Quote, Profile, Research) sent financials reeling and miners tracked weaker metal prices.

The FTSE 100 .FTSE closed down 66.1 points at 6,204.7, for a weekly loss of 0.2 percent. The blue-chip index has gained nearly 15 percent since March 17 when it hit its lowest closing level in 2008 to date, but it is still down 4 percent for the year.

"I don't find it particularly disconcerting. I think the market seems reasonably stable and if ... the financial situation stabilises, it shouldn't be too bad," said Tim Whitehead, head of portfolio services at Redmayne-Bentley.

"I won't be surprised if there is a little bit more weakness in the short term. I am hoping that the 6,000 is now representing the support rather than the resistance level."

Banks shaved 20 points off the index, with Barclays (BARC.L: Quote, Profile, Research), Royal Bank of Scotland (RBS.L: Quote, Profile, Research), Lloyds TSB (LLOY.L: Quote, Profile, Research), HBOS (HBOS.L: Quote, Profile, Research), HSBC (HSBA.L: Quote, Profile, Research) and Alliance & Leicester (ALLL.L: Quote, Profile, Research) losing 1.7 to 2.9 percent.

A rating downgrade from Morgan Stanley also hurt HSBC.

American International Group, the world's largest insurer, reported a record quarterly loss of $7.8 billion (4 billion pounds), largely as a result of writing down assets that have links to subprime mortgages.

Adding to the gloom, home-repossession orders in England and Wales hit the highest level since the early 1990s in the first three months of this year, government figures showed, and experts said the situation was set to worsen.