FTSE Falls 1.4% Early On Banks, Oils; Rio Tinto Up

Investors will watch UK manufacturing PMI data at 0930 GMT for more clues on the outlook for the ailing British economy.

Britain's FTSE 100 fell 1.4 percent early on Monday, led by oil producers and banks, but Rio Tinto rose after saying it was in talks to sell assets to China's Chinalco.

By 0827 GMT, the FTSE 100 was down 59.48 points at 4,090.16, after losing 6.4 percent last month to extend 2008's dismal performance amid a credit crisis and on fears of a deep and severe global recession.

Banks took the most points off the index, with Barclays, HSBC, Royal Bank of Scotland, Lloyds Banking Group and Standard Chartered down between 3.2 and 9.3 percent.

"The UK FTSE is threatening the 4,000 level. The DAX has a great chance of trading below 4,000 ... There is a great wave of negative sentiment," said Stephen Pope, chief global market strategist at Cantor Fitzgerald.

Oil producers were also weaker as crude prices fell. BP, Royal Dutch Shell, BG Group and Cairn Energy slipped between 0.9 and 1.8 percent.

South Korea's exports tumbled by a third, Australian house prices fell, and news of more crippling losses hit Japanese electronics stocks, adding to mounting evidence of a deepening slowdown.

Hitachi Ltd warned of a record $7.8 billion annual loss due to weak sales, a firmer yen and costs to restructure its sprawling operations, sending its shares sinking 14 percent in Tokyo.

Trading activity may be thin as heavy snow brought havoc to London's transportation networks.

Investors will watch UK manufacturing PMI data at 0930 GMT for more clues on the outlook for the ailing British economy.

Researchers Experian said shopper numbers in January rose 1.2 percent in Britain from the same month last year, though any extra business is likely to have been outweighed by heavy discounting.

Rio Tinto gained 4.7 percent after the miner said it had held talks to sell some assets to Chinese government-owned aluminium maker Chinalco, its biggest shareholder, reportedly to cut debt by up to $8 billion.

But other miners slipped on softer metal prices. BHP Billiton, Anglo American, Xstrata, Kazakhmys, Vedanta Resources and Antofagasta lost between 1.9 and 4.7 percent.

ICAP dropped 3 percent. The interdealer broker said it was part of a group of financial companies considering a cash offer for LCH.Clearnet, the London-based clearing house.

GlaxoSmithKline put on 0.4 percent. The Sunday Telegraph newspaper said the drugmaker was set to announce about 6,000 job losses when it posts its results on Thursday.