* FTSE 100 down 1.2 pct
* Broad-based decline across most sectors
* Banks extend post-ECB rally
* Bunzl, Burberry fall after downgrades
* Mid-cap pub operators in focus after results
(ADVISORY- Follow European and UK stock markets in real time on
the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)
By Kit Rees and Alistair Smout
LONDON, Sept 9 British shares fell on Friday,
posting their biggest weekly decline since May, after the
European Central Bank made no changes in its asset-buying
The FTSE 100 index closed down 1.2 percent at
6,776.95 points, with the losses accelerating after U.S. markets
opened, and dropped 1.7 percent for the week. The decline was
bigger than the losses after Britain voted to leave the European
On Thursday, the ECB kept rates on hold and, while
maintaining the timetable for the bank's quantitative easing
programme, President Mario Draghi said that a possible extension
of the programme had not been discussed, sending European
Wall Street opened sharply lower after one usually dovish
Fed official warned of the risks of not raising rates soon. Some
also cited heightened geopolitical tensions after North Korea
completed a nuclear test as dampening appetite.
The falls were broad-based, with all sectors bar one in
negative territory. Growth-sensitive stocks such as consumer
goods were especially hit.
However, banks rose, with Royal Bank of Scotland up
2.3 percent and Barclays up 0.9 percent. Analysts said
that Draghi's lack of an indication for any further rate cuts
had been taken as a positive by investors.
"These lower interest rates are really damaging the banks,"
said Jonathan Roy, advisory investment manager at Charles
"Whereas there has been a continual cutting in rates over
the last 18 months, which has been really damaging for core
banking profitability ratios, it signalled yesterday that there
might be a plateau now in deterioration of those ratios, which
is being taken as a positive for the banks currently."
Broker downgrades weighed on Bunzl, which dropped
3.4 percent after HSBC cut its rating on the stock to "hold",
citing macro uncertainty, and Burberry, which fell 2.5
percent after Goldman Sachs removed the luxury goods stock from
its Sustain Focus List.
"Over the last two years (FY14-16), Burberry has seen weaker
than expected financial performance," Goldman said in a note.
"The key drivers of this deterioration have been subdued
sales growth and increasing costs associated with the company's
strategic investments ... We are concerned that these headwinds
Outside of the blue chips, pub chain operator J.D.
Wetherspoon rose 2.4 percent after reporting
Peer Greene King, however, dropped 6 percent after
reporting a slowdown in like-for-like sales growth and saying
that trading could get tougher as a result of Brexit
(Editing by Larry King)