* FTSE 100 down 0.4 pct at close
* Banks weigh as Fed minutes indicate balance sheet
* Pearson hit by Exane downgrade, trades ex-div
* Woodford-backed Allied Mind drops below IPO price
(Adds detail, updates prices at close)
By Helen Reid and Kit Rees
LONDON, April 6 British shares dropped on
Thursday after minutes of the Federal Reserve's last meeting
indicated the bank would shrink its balance sheet later this
The FTSE 100 was down 0.4 percent at 7,303.20 points
at its close, with financials the biggest drag, taking almost 11
points off the index. U.S. equities had dipped on Wednesday
"There were two elements in the Fed minutes: the fact that
some officials thought equities were overvalued; but the smarter
money is looking at the fact balance sheet reduction seems to be
indicated towards the end of this year," said Panmure Gordon
chief economist Simon French.
Lloyds, which traded ex-div, was among the biggest
fallers, down 2.2 percent, while Barclays fell 1
Pearson was down 6.7 percent, also ex-div and
further weighed by a downgrade from Exane to 'underperform'.
"Structural pressures in U.S. higher education courseware
are now well documented in the share price. However, we raise
fresh concerns on the sustainability of double-digit growth in
Pearson's U.S. virtual schools business," the broker said.
The FTSE 100 was also under pressure from a firmer sterling,
as a large number of FTSE constituents are dollar-earning firms.
April is the month when UK companies make big dividend payouts,
and is one reason why the pound has traditionally risen then.
Real estate was the top European sector, and British Land
Company and Land Securities Group were up 1.7
to 2.3 percent. Shares in easyJet were the top gainers,
rising 4.2 percent
Intellectual property firm Allied Minds was the
biggest mid-cap faller, down 5.4 percent and touching a record
low, trading below its IPO price for the first time. This took
the shares' year-to-date decline to over 62 percent.
The company, 28 percent owned by Woodford Investment
Management, had its worst ever day on Wednesday after cutting
funding for seven of its portfolio companies.
Jefferies however raised the stock to 'hold' from
"Allied Minds' new CEO has taken less than a month to cull
the weaker companies in the portfolio," said the broker. "This
has happened more quickly and broadly than we expected, but we
see this $147 million hit as decisive rather than panicked or
(Reporting by Kit Rees and Helen Reid; editing by John