* Oils up as Israel-Hamas conflict lifts crude
* Firm metal prices boost miners
* Banks gain but economic picture remains glum
By Jon Hopkins
LONDON, Dec 29 (Reuters) - Britain's top share index was up
2.5 percent by midday on Monday, as stronger crude and metal
prices lifted heavyweight commodity stocks, while banks and
retailers were firmer despite a glum economic picture.
By 1140 GMT, the FTSE 100 <> was up 103.25 points at
4,319.84, after losing 1.6 percent last week in a shortened
trading week due to Christmas. Activity was expected to be light
this week because of the New Year holidays, with many traders
extending their holidays into 2009.
"Volumes are very low, and this has inflated the blue chip
gains which are mainly just commodity-fuelled," said Chris
Bennett, senior trader at binary betting firm ChoiceOdds.
"There looks to be just a slow drift to the end of 2008, a
year traders will be very glad to see the back of."
Oil producers added the most points to the index, reflecting
firmer crude prices <CLc1>, back above the $40 a barrel level
after weekend violence flared between Israel and Hamas.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L>,
Cairn Energy <CNE.L> and Tullow Oil <TLW.L> were 3.5 to 5.4
percent higher.
Stronger metal prices lifted mining shares, with Anglo
American <AAL.L>, BHP Billiton <BLT.L>, Rio Tinto <RIO.L>,
Kazakhmys <KAZ.L> and Eurasian Natural Resources <ENRC.L> up
between 5.4 and 6.9 percent.
"It is the rebound of the U.S. crude that's driving the
market at the moment. All eyes are on gold as well with the $900
level as the short-term resistance. At the moment, it's all
about metal and oil," said David Fineberg, a senior dealer at
CMC Markets.
The economic picture in the UK remained grim, particularly
on the high street with children's wear retailer Adams this week
expected to become the latest firm to fall into administration.
Property consultant Hometrack said in its monthly survey
that housing prices in England and Wales fell 8.7 percent in
2008, bringing the average price of a house to 159,900 pounds
($235,800). []
The Times quoted the Chartered Institute of Personnel and
Development as saying the recession would claim 600,000 jobs
next year.
Banks, which have been at the epicentre of the financial
turmoil, were generally firmer despite indicators pointing
towards a looming recession.
Royal Bank of Scotland <RBS.L>, Barclays <BARC.L> and HBOS
<HBOS.L> added between 1.7 and 7.0 percent.
Britain's banks face up to 70 billion pounds of losses on
commercial property loans, enough to force some of them into a
further round of taxpayer bailouts, according to research by
investment bank Close Brothers, the Daily Telegraph said.
Most retailers found support as shoppers swarmed on to the
high street after Christmas in search of sale bargains, with
Home Retail <HOME.L>, Next <NXT.L> and Kingfisher <KGF.L> adding
0.7 to 3.3 percent. Marks & Spencer <MKS.L>, however, reversed
its early gains, losing 3.2 percent.
John Lewis [], the employee-owned group, said on
Sunday the first day of its post-Christmas clearance sale
produced record takings at its department stores.
Real estate issues also missed out on the market rally
having had a good run ahead of the Christmas break, with Liberty
International <LII.L>, Hammerson <HMSO.L>, British Land <BLND.L>
and Land Securities <LAND.L> losing between 1.1 and 5.1 percent.
Sterling, meanwhile, tumbled to a record low against the
euro and a basket of currencies, stung by the ongoing view that
a weak UK economy will require more interest rate cuts which
will keep UK rates lower than those in the euro zone.
(Additional reporting by Dominic Lau; Editing by David Cowell)
