FTSE ends lower as banks and oil weigh

By Michael Taylor

LONDON (Reuters) - The blue-chip index ended lower on Friday during a relatively quiet session as banking stocks slipped following a bearish Goldman Sachs note and oil companies tracked softer crude prices.

The FTSE 100 .FTSE shed 63.8 points, or 1.2 percent, to 5,412.8 in thin trading volumes as investors took a breather following the volatile data-fuelled session on Thursday.

"If you look at the technicals and the fundamentals, people think there is still some way for it to fall, probably another 250 points before we get any recovery," said Neil Parker, market strategist at Royal Bank of Scotland.

"Nobody wants to be long in this market ... I would be particularly worried by a lot of inflation numbers that are coming out," he added.

The benchmark index has now notched seven consecutive weekly losses.

Goldman said in a note to clients that European banks might need to raise 60 to 90 billion euros if a turn in the credit cycle triggered losses comparable with those seen a decade ago.

The brokerage also said it had lowered 2008-2010 estimates for over 40 banks and cut price targets on a number of them, including Barclays (BARC.L: Quote, Profile, Research), Royal Bank of Scotland (RBS.L: Quote, Profile, Research), Deutsche Bank (DBKGn.DE: Quote, Profile, Research) and UBS (UBSN.VX: Quote, Profile, Research).

Royal Bank, Barclays, HBOS (HBOS.L: Quote, Profile, Research), HSBC (HSBA.L: Quote, Profile, Research) and Standard Chartered (STAN.L: Quote, Profile, Research) were down between 2.1 and 4.5 percent.  Continued...