FTSE falls early as banks weigh

By Dominic Lau

LONDON (Reuters) - Top share index fell 0.5 percent early on Thursday, led by banks after Barclays (BARC.L) posted a nearly $2 billion (1.03 billion pound) writedown and after Royal Bank of Scotland (RBS.L) traded ex-rights issue.

By 9:03 a.m., the FTSE 100 .FTSE was down 36.2 points, or at 6,182.7 amid a slew of company trading updates.

Barclays (BARC.L) shed 1.3 percent. The bank said profits fell in the first quarter after it took a 1 billion pound writedown on assets tarnished by the credit crunch, but it did not disclose the extent of its profit fall.

The bank also refused to rule out rights issue.

Royal Bank of Scotland (RBS.L), HSBC (HSBA.L), HBOS HBOS.L, Lloyds TSB (LLOY.L) and Alliance & Leicester ALLL.L dropped between 1.3 and 2.8 percent.

"The general comments that we are hearing about the general economy, the lack of a positive update from Barclays today and the announcement yesterday of B&B's rights issue and potentially there may yet be a couple to follow ... are hanging over the sector," said Richard Hunter, head of UK equities at Hargreaves Lansdown.

Miners were standout losers too after recent gains and after Indian-focused Vedanta Resources (VED.L) posted a 7.1 percent fall in annual underlying earnings per share despite stronger output, reflecting a share issue and higher minority interests.

Vedanta dipped 1.7 percent, while BHP Billiton (BLT.L), Rio Tinto (RIO.L), Kazakhmys (KAZ.L), Anglo American (AAL.L) and Antofagasta (ANTO.L) shed 1.6 to 2.8 percent. Some stocks in the sector have been trading at record levels this week.