FTSE down more than 50 points

The FTSE 100 Index slipped more than 1% by noon today as weakness in banking stocks offset one of the London market's biggest takeover deals of recent times.

The FTSE 100 Index slipped more than 1% by noon today as weakness in banking stocks offset one of the London market's biggest takeover deals of recent times.

Cadbury shares jumped 3% after it accepted defeat in its long-running takeover tussle and recommended that its shareholders back US food giant Kraft's 840p a share or £11.5bn (€13.13bn) takeover offer.

But as the saga drew to a close the rest of the market headed further into the red, with the FTSE 100 Index losing 52 points to 5442.2 by lunchtime.

The fall came as official figures revealed a much higher than expected increase in inflation last month.

Barclays was one of the biggest top flight fallers after Credit Suisse downgraded its price target from 400p to 350p and said it remained cautious on UK banks.

"This year more than ever, we believe regulation and politics will determine share price performance," research analysts Jonathan Pierce and Robert Self wrote in a Credit Suisse note.

Barclays fell 7.15p to 310.5p, while Lloyds Banking Group dropped 1.3p to 57.3p and HSBC declined 15.3p to 683.8p.

The retail sector also suffered from a broker downgrade after HSBC revised its position on a trio of retailers, including Home Retail Group, to neutral from overweight.

Argos owner Home Retail was down 5.3p to 262.5p, while outside the top flight the note caused Game Group to fall 1.75p to 96.5p and Halfords to decline 3.2p to 393.1p.

Burberry proved to be the exception in the sector as its shares rose to the top of the blue-chip risers board. The fashion chain impressed analysts with a better-than-expected third quarter update. Shares were up 23.5p to 623p, a gain of 4%.

It was followed by Cadbury - up 3% or 27.5p to 835p - after Kraft unveiled the biggest deal in the sweet sector since Nestle bought Rowntree in 1988. The proposed price rivals the amount paid by EDF for British Energy last year.

Severn Trent also rose nearly 3% despite revealing it planned a one-off dividend cut of 10% in order to meet regulator Ofwat's recent ruling that it reduce households bills by 4% by 2015.

But with uncertainty now removed in relation to the 2010-15 period, shares rose 28p to 1117p.

Carphone Warehouse shares were higher in the FTSE 250 Index, up 0.9p to 197.9p, after its sponsorship of the X-Factor helped it add 36,000 broadband customers in its third quarter.

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