* FTSE 100 rises 1.1 pct
* Commodities top gainers as raw material prices rise
* Broker notes weigh on Rolls-Royce
By Dominic Lau
LONDON, Aug 14 (Reuters) - Britain's top share index rose
1.1 percent by midday on Thursday as firmer raw material prices
boosted commodity stocks, though battered banks remain under
pressure and Rolls-Royce <RR.L> eased on negative broker notes.
By 1041 GMT, the commodity-heavy FTSE 100 <> was up 60
points at 5,508.6, recovering from the previous session's 1.6
percent loss and snapping a two-day losing run.
"I have been using this recent rally back up from the end of
July ... to bank a few profits," said Tim Whitehead, head of
portfolio services at Redmayne-Bentley.
"I am wary about the whole situation. It's encouraging that
inflation pressure might recede a little bit with the oil prices
going down, but the latest Bank of England report shows that
food prices going up. That will bring pressure on wage
inflation."
Energy stocks contributed more than 30 points to the index,
as crude prices <CLc1> traded above $116 a barrel.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, gas producer BG Group
<BG.L>, Cairn Energy <CNE.L> and oil and gas services firm
Petrofac <PFC.L> advanced 1.8 to 5.1 percent.
Miners were also standout gainers, tracking stronger metal
prices. Rio Tinto <RIO.L>, BHP Billiton <BLT.L>, Anglo American
<AAL.L>, Xstrata <XTA.L>, Antofagasta <ANTO.L> and Ferrexpo
<FXPO.L> were up between 4.3 and 6.2 percent.
Banks were the top losing sector, with HSBC <HSBA.L>, Royal
Bank of Scotland <RBS.L>, HBOS <HBOS.L>, Lloyds TSB <LLOY.L> and
Barclays <BARC.L> down between 0.2 and 3.3 percent.
Analysts at Goldman Sachs said Barclays may need to write
down 1.5 billion pounds more over the next 18 months, adding the
bank has little room to absorb further material losses without
the dividend potentially being cut or paid in shares.
HBOS, meanwhile, said it would cut up to 425 jobs and shut
one of its five mortgage brands to new business as the group
positions itself for a shrinking loan market and a drop in house
prices.
Overnight U.S. stocks fell as persistent concerns about the
credit crisis hurt bank shares.
Investors will keep an eye on U.S. consumer prices data as
well as weekly jobless claims later in the day for further clues
on the state of the world's largest economy.
BRITISH LAND UP, TUI TRAVEL FALLS
Among companies reporting, British Land <BLND.L> put on 1.3
percent after it posted a 23 percent rise in underlying pretax
profit in the quarter and chalked up like-for-like rental growth
of 6.3 percent versus the industry benchmark of 3.3 percent,
despite the value of its multibillion pound property portfolio
slipping 5 percent in the three months to end-June.
TUI Travel <TT.L> lost 1.9 percent despite Europe's biggest
travel firm saying that demand for package holidays remained
strong and it was confident of meeting its expectations for 2008
and 2009.
British engine maker Rolls-Royce <RR.L> dropped 2.9 percent
as traders cited recent negative broker comment and stock
switching.
On Wednesday, Dresdner cut its rating on the stock to "hold"
from "buy", while Morgan Stanley reduced its price target to 500
pence from 520 pence with an "overweight" rating.
BSkyB <BSY.L> slipped nearly 1 percent after UBS cut its
price target on the pay-TV firm.
London Stock Exchange <LSE.L> shed 2.2 percent as traders
cited pressure coming from the Turquoise trading platform, which
will start operating on Friday and is expected to lead to
downward pressure on trading fees.
(Additional reporting by Michael Taylor; Editing by David
Cowell)
