FTSE hits one-month closing low

By Tricia Wright

LONDON (Reuters) - The top share index fell to its lowest closing level in a month on Tuesday, led down by banks after shake-ups at Royal Bank of Scotland (RBS.L) and Lloyds (LLOY.L) and poor results from Swiss peer UBS (UBSN.VX).

The FTSE 100 index .FTSE closed 67.29 points or 1.3 percent weaker at 5,037.21, having surrendered the 5,000 level for the first time since October 2 earlier in the session. It traded as low as 4,985.09.

Upbeat data from across the Atlantic helped the index pare its losses, with new orders received by U.S. factories beating Wall Street expectations and rising 0.9 percent in September.

"There's always going to be a bit of profit taking on any sustained move higher and that's certainly what's happening today," said Angus Campbell, head of sales at Capital Spreads.

The index has surged about 46 percent from a six-year low in March, though is still 7 percent below its level in mid-September 2008 before the collapse of Lehman Brothers.

Campbell said investors would be keenly awaiting Friday's U.S. non-farm payrolls figures to see whether last week's above-forecast U.S. GDP figures will be complemented by the employment situation.

Banks were hit hardest as Lloyds Banking Group launched a record 13.5 billion pound rights issue, and along with rival Royal Bank of Scotland (RBS) agreed to sell off some businesses to limit their reliance on government support.

The Treasury said Lloyds and RBS would between them have to sell businesses equating to 10 percent of the UK retail banking market. [ID:nL3540088]