FTSE Down 0.1 Pct; Weak Oils, Banks Offset Pharmas

Britain's leading share index closed down 0.1 percent on Tuesday, weighed by weakness in oils and banks, and as U.S. housing data pointed to a sluggish economic recovery, but pharmaceuticals stocks limited losses.

The FTSE 100 fell 4.03 points to 4,230.02 in a choppy session, with thin volumes exacerbating movements, after losing 2.6 percent on Monday.

The index has gained more than 22 percent since hitting a six-year low in March, but is still down 4.6 percent on the year.

"I think it's one of those stories where we started off trying to replace some of the ground that was lost in the last few sessions ... (but) the numbers that came from the States aren't all that encouraging at the moment, enough to put us on the back foot," said Stephen Pope, chief global market strategist at Cantor Fitzgerald.

Sales of previously owned homes in the United States rose at a slower-than-expected pace in May, an industry survey showed on Tuesday.

Oil firms reversed gains made earlier in the session, as crude drifted towards $67 a barrel. BG Group, BP and Cairn Energy fell between 0.1 and 0.6 percent.

Banks were also big fallers, amid renewed pessimism on economic recovery.

Lloyds Banking Group dropped 4.2 percent, Royal Bank Scotland fell 2.1 percent, and Standard Chartered was off 3.4 percent.

Within the financial sector, Legal & General, down 7.9 percent, led life insurers lower after Societe Generale cut its rating on the stock to "sell" from "hold".

Aviva, Friends Provident and Prudential lost 0.9-3.1 percent.

In the mining sector, Anglo American, which rejected a $68 billion merger approach from rival Xstrata, fell 2.7 percent, despite market talk of a possible bid from Aluminum Corp of China (Chinalco).

A Chinalco spokesman in Shanghai said the company was unaware of the bid talk, while Chinalco representatives in London and officials from Anglo declined to comment.

Xstrata gained 0.8 percent, while strength was also seen among other blue-chip miners. Antofagasta added 3.9 percent, with Eurasian Natural Resources, Rio Tinto and Kazakhmys up between 0.2 and 3.7 percent.

DRUGS IN DEMAND

Drugmakers were in demand as investors piled into stocks perceived as defensive.

GlaxoSmithKline, which announced a deal with UK biotech Chroma Therapeutics, rose 1.6 percent, while peers AstraZeneca and Shire added 0.9 percent and 2.2 percent, respectively.

Elsewhere, Thomson Reuters rose 3.6 percent after the global information firm said it planned to delist from the London Stock Exchange, which analysts said would close the discount to the company's higher-priced New York shares.

In UK economics news, in a positive sign for the UK housing market, figures from the British Bankers Association (BBA) showed a 15.8 percent rise in the number of mortgages approved for house purchases in May from a year earlier.