* FTSE 100 down 0.4 percent
* 50-day moving average acts as floor for weakness
* Euro zone concerns resurface as finance ministers meet
By Toni Vorobyova
LONDON, April 12 (Reuters) - Britain's top share indexsuccumbed to profit-taking on Friday after its best four-day runin three months, with sentiment dented by investor nervousnessabout the adequacy of the bailout for Cyprus.
Banks, the British sector most exposed to euro zonesovereign risk, sold off as EU finance ministers gathered for aninformal two-day meeting, where the Cyprus bailout package topsthe agenda.
EU officials said there were no plans to increase the 10billion euro bailout agreed for Cyprus, but that the country isconsidering asking to front load the payment of EU structuralfunds.
Any prospect of a flare-up of the euro zone crisis, coupledwith escalating geopolitical tensions over North Korea, prompted investors to lock in profits on theFTSE 100, which had gained 2.7 percent in the previous foursessions.
The benchmark index was down 25.97 points, or 0.4 percent,at 6,390.17 points by 1051 GMT.
"The market had a fairly decent run for the week so ... there is no harm in locking away some profits ahead of theweekend. People are just being prudent," said Trevor Coote, headof equity sales at Alexander David Securities, noting activityin banks and insurers.
Friday's sell-off pushed the FTSE 100 through technicalsupport at the 30-day moving average, although the 50-day line,around 6,371.97 points, provided a floor for the weakness.
With the index still in sight of 5-year highs at 6,533.99hit in March and up 8.8 percent for the year, some companies areincreasingly looking expensive relative to fundamentals,prompting a string of analyst downgrades.
Shares in Croda dropped 3.6 percent, the top FTSE100 faller, after UBS downgraded the speciality chemicals makerto 'sell', saying that a rise in its price/earnings ratio to 20times from 16 times left it looking expensive relative to Swisspeer Givaudan.
Valuation reasons also prompted JP Morgan to downgrade Legal& General to 'underweight', sending the insurer's shares down 2percent. Legal & General is trading on 13.1 times itscurrent earnings, making it the second-most-expensive FTSE 100insurer after Admiral on that measure, according toThomson Reuters StarMine.
Given the relatively high valuations - the 12-month forwardprice/earnings ratio on the FTSE 100 itself has jumped fromaround 8.1 times in October 2011 to 11.5 times now according toDatastream - are increasingly putting the emphasis on companies'ability to grow earnings.
Here, Britain potentially looks better than its Europeanrivals, prompting HSBC to upgrade the country to 'overweight'from 'underweight'.
"The short-term drivers are positive for the UK, drivenprimarily by earnings momentum. This has rebounded sharply andit is now the strongest in Europe," HSBC analysts wrote.
"This indicates a higher degree of confidence in the 2013earnings outlook. We forecast 9 percent earnings per sharegrowth, an upside surprise versus the consensus estimate of 5percent." (Editing by Stephen Nisbet)
Legal & General (LGEN)
