* FTSE 100 edges up 0.2 pct
* Energy stocks slip on production fears, profit-taking
* Banks rise as sentiment improves
By Dominic Lau
LONDON, Aug 28 (Reuters) - Britain's leading share index
edged up by midday on Thursday as gains in banks offset weaker
energy stocks, which fell on concerns over a tropical storm
hitting production.
By 1028 GMT, the FTSE 100 <> was up 11.7 points, or 0.2
percent, at 5,539.8, after gaining 1.1 percent on Wednesday.
UK banks gained after U.S. stocks rose overnight as
investors grew more confident that Fannie Mae <FNM.N> and
Freddie Mac <FRE.N> will not require a government bailout that
would wipe out their equity.
HBOS <HBOS.L>, Barclays <BARC.L>, Lloyds TSB <LLOY.L>, HSBC
<HSBA.L>, Royal Bank of Scotland <RBS.L> and Standard Chartered
<STAN.L> put on 0.4 to 4.5 percent.
"Some people are getting out of the commodity sector and
back into banking," said Mark Foulds, head of equity sales at
TradIndex.
"That's not to say the credit crunch is over, but I think
peoples' memories die very quickly. And when there is a bit of
confidence out there, the market seems to be holding at this
level," he said, adding it would take only a little bad news to
push markets back down again.
France's Credit Agricole <CAGR.PA> rebounded after early
losses to jump 5.8 percent despite posting a 94 percent fall in
net profit. Traders and fund managers said the bank had got the
bulk of the writedowns out of the way and results in the third
and fourth quarter would be better.
But British subprime lender Cattles <CTT.L> fell 1.5 percent
after the mid-cap company reported a 16.8 percent increase in
its half-year profit but said more customers were experiencing
repayment difficulties in the face of weakening economic growth.
The Nationwide building society said British house prices
fell almost 2 percent on the month in August to post their
biggest annual drop since monthly records began in 1991.
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Property shares, however, were in demand after the Financial
Times said Australian shopping centre owner Westfield <WDC.AX>
had almost filled its new White City shopping mall in west
London in spite of the deteriorating economic environment for
retailers.
Hammerson <HMSO.L>, British Land <BLND.L> and Land
Securities <LAND.L> climbed between 2.5 and 2.9 percent.
WEAKER OILS
Heavyweight oil shares suffered as traders cited
profit-taking and concerns over production on fears that
Tropical storm Gustav may hit the Gulf of Mexico after it
morphed into a major hurricane.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, gas producer BG Group
<BG.L> and Cairn Energy <CNE.L> slipped 0.6 to 2.9 percent.
Kazakhmys <KAZ.L> fell 3.4 percent after the Kazakh miner
posted a 21 percent fall in first-half earnings per share as bad
weather hit output, outweighing higher prices. Its stock was
down 3.6 percent.
The rest of the mining companies were mixed, with Rio Tinto
<RIO.L>, Anglo American <AAL.L>, Antofagasta <ANTO.L> and BHP
Billiton <BLT.L> gaining and Eurasian Natural Resources
<ENRC.L>, Xstrata <XTA.L> and Ferrexpo <FXPO.L> dropping.
Index heavyweight Vodafone <VOD.L> lost 1.1 percent after
Societe Generale cut its price target on the mobile phone group
to 120 pence from 135 pence.
Severn Trent <SVT.L> dropped 2.1 percent to 1,376 pence
after Goldman cut the water company's rating to "sell" from
"neutral" with a price target of 1,396 pence, from 1,585 pence.
British Energy <BGY.L> was down 1 percent. The Daily
Telegraph said the UK government said it wanted a deal between
the British power company and EDF <EDF.PA> hammered out within
the next two weeks.
BT Group <BT.L> advanced 3.1 percent after Goldman Sachs
upgraded its rating on the telecoms firm to "buy" from
"neutral".
(Additional reporting by Michael Taylor; editing by Sue Thomas)
