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Britain's FTSE stumbles off 4-1/2 year peaks

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(Globalpost/GlobalPost)

* FTSE 100 down 0.1 pct after setting fresh peak

* Banks lead the retreat on Libor concerns

* Technical charts point to further gains

By Toni Vorobyova

LONDON, Jan 29 (Reuters) - Britain's top share index stumbled after hitting fresh 4-1/2 year peaks on Tuesday, with a retreat in heavyweight banking shares prompting investors to lock in some profits.

Royal Bank of Scotland led the fallers, off 5.6 percent after the Wall Street Journal reported that the lender is close to a 500 million pound ($785 million) settlement with U.S. and British authorities over Libor, returning the interbank rate fixing scandal to the front of investors' minds.

With UK banks already up some 11 percent since the start of 2013 and the FTSE 100 already above analysts' mid-year forecasts with a 6.7 percent rally, concerns about problems in the financial sector gave the excuse for some profit taking.

"People are fearful of more faults being found (in the financial sector), it's not been fixed yet," said Steve Larkins, head of sales trading at Seymour Pierce.

"Surely for now we've gone far enough for now without the real support that the market needs from the economic numbers ... You've got to look to take some risk off the table, take some profits."

The FTSE 100 was down 0.1 percent, or 5.20 points, at 6,289.21 points by 1137 GMT, off an earlier intra-day peak of 6,308.43 which was its highest reading since May 2008. The psychologically key 6,300 level offered some technical resistance to the rally, with the index failing to hold above it for a second session in a row.

The UK benchmark has already powered past the 6,100 mid-year consensus forecast in last month's Reuters global equity market poll, and is in sight of the 6,400 points which was predicted by year end.

That, in turn, has pushed the FTSE 100 into overbought territory on both the 7- and the 14-day relatives strength index (RSI), although technical strategists said it was too soon to expect a meaningful correction.

"There are short-, medium- and long-term breaks through the critical prior high levels," analysts at Seven Days ahead said in a note. "Stay long now there is a confirmed break of 6,062 (on FTSE March future)."

Energy and mining stocks offered the biggest support to the UK index on Tuesday, bolstered by solid oil and commodity prices on better-than-expected U.S. durable goods orders the previous session.

In a further boost to sentiment, HSBC raised its 2013 copper price forecast by 7 percent, while also increasing expectations for iron ore and aluminium.

Anglo American led the miners, up 2.3 percent after disclosing a $4 billion writedown on Minas Rio iron ore operations and forecasting capital expenditure for the Brazilian project at $8.8 billion - less than some had expected.

"Overall we believe the announcement should be taken in a positive light by the market as it draws a line - albeit dotted until licences are fully granted - under concerns around the capital costs and timelines for delivery of the project," analysts at Barclays said in a note. ($1 = 0.6367 British pounds) (Reporting By Toni Vorobyova; Editing by Ruth Pitchford)

http://www.globalpost.com/dispatch/news/thomson-reuters/130129/britains-ftse-stumbles-4-12-year-peaks