* Miners, oils gain on firmer raw material prices
* Banks fall despite Fed rate cut; HSBC top loser
* John Wood Group down after trading update
By Dominic Lau
LONDON, Dec 17 (Reuters) - Britain's leading share index
edged up by midday on Wednesday, as firmer raw material prices
lifted heavyweight commodity stocks, outweighing weakness in
banks led by HSBC <HSBA.L> despite Fed's hefty rate cut.
Miners offered support to the index, aided by firmer metal
prices. Lonmin <LMI.L>, Fresnillo <FRES.L>, Rio Tinto <RIO.L>,
Xstrata <XTA.L> and Kazakhmys <KAZ.L> gained 2.5 percent to 7.3
percent.
Anglo American <AAL.L> rose 2.1 percent after it said it
would halve its 2009 capital expenditure programme to $4.5
billion.
Oil producers were also firmer, with BP <BP.L> up 2.1
percent and BG Group <BG.L> strengthening 3.1 percent.
By 1136 GMT, the FTSE 100 <> was up 22.75 points, or
0.5 percent, at 4,331.83 in a choppy session after gaining 0.7
percent on Tuesday.
HSBC sank 5.2 percent, falling for the fifth-straight
session, on fundraising worries. Lloyds TSB <LLOY.L>, HBOS
<HBOS.L> and Barclays <BARC.L> eased 0.3 percent to 2.6 percent.
The announcement from French bank BNP Paribas <BNPP.PA> that
its investment bank unit had a $995 million loss for the first
11 months of the year and speculation of a possible fourth
quarter loss at Deutsche Bank <DBKGn.DE> also weighed on the
financial sector.
Wall Street bank Morgan Stanley <MS.N> is set to announce
its fourth quarter results later in the day, which will provide
a further gauge of the struggling financial sector in the face
of a credit crisis and a possible deep global recession.
The U.S. Federal Reserve on Tuesday broke into uncharted
territory as it cut benchmark interest rates to as low as zero
and pledged to use "all available tools" to turn back a
deepening recession.
"The decision will undoubtedly focus the minds of a lot of
traders as to how deep a rate cut again could be to be
sanctioned ... from the European Central Bank and the Monetary
Policy Committee," said Neil Parker, market strategist at RBS.
Parker said interest rate futures were pricing in at least a
further 1 percent cut in rates from both central banks.
"But my own view is that sentiment in the equity market
should generally be positive because of the fact that the
authorities are going to be looking towards quantative easing,
which will undoubtedly help to loosen up the wholesale money
market," he said.
The minutes of last Bank of England meeting showed all nine
members of the Monetary Policy Committee voted for this month's
1 percentage point cut in the interest rate and discussed
whether an even bigger reduction might be needed.
GLOOMY OUTLOOK
The number of Britons out of work and claiming benefit rose
for a tenth consecutive month in November and by the largest
amount since March 1991, while retail sales fell at their
fastest annual pace in at least a quarter of a century in
December.
Admiral Group <ADML.L> was another big faller, down 2
percent after UBS cut its rating on the insurer to "neutral"
from "buy" with a reduced target price.
Other insurers, however, rallied after recent falls with
Legal & General <LGEN.L>, Friends Provident <FP.L> and
Prudential <PRU.L> up between 3 percent and 6.4 percent.
Oil services firms, however, were down after John Wood Group
<WG.L> said 2009 would be a challenging year as customers cut
spending in response to lower oil prices.
Wood Group shed 4.6 percent. Peer Amec <AMEC.L> lost 2
percent after UBS downgraded the stock to "neutral" from "buy".
United Utilities <UU.L> fell after going ex-dividend.
(Additional reporting by Jon Hopkins; Editing by Sharon
Lindores)
