* FTSE rises 1.3 pct on hopes of Libyan peace deal
* Commodity stocks rise as oil price falls
* Amec and IMI boosted by results
By David Brett
LONDON, March 3 (Reuters) - Britain's top shares rallied on
Thursday, as oil prices softened on hopes of a peace deal in
Libya, while investors engineers Amec <AMEC.L> and IMI <IMI.L>
were boosted by earnings news.
Brent oil <LCoc1> slipped 1 percent to around $115 a barrel,
as the Arab League said a peace plan for Libya was under
consideration. []
Commodity stocks, which have been hit by concerns that the
rising cost of oil could derail a fragile global economic
recovery, led the rally.
Tullow Oil <TLW.L> was top performer among energy shares
<.FTNMX0530>, up 3.7 percent after announcing an oil discovery,
with Oriel Securities to raising its investment recommendation
on the stock to "hold" from "reduce".
Xstrata <XTA.L> was a notable gainer among the miners
<.FTNMX1770>, up 2.2 percent after stakeholder Glencore reported
bumper profits.
By 1210 GMT, the FTSE 100 index was up 74.77 points, or 1.3
percent, at 5,989.66, having fallen in eight of the previous
nine trading days.
David Battersby, an investment manager at Redmayne-Bentley,
said his investment strategy had not changed drastically and he
expected markets would bounce back.
"Once the situation has sorted itself, markets will recover.
But it is a matter of time, and are we right on this?" he said.
Battersby said the market needed resolution on the political
situation in the Arab world before the FTSE could make real
advances, but higher oil prices and the impact of interest rate
rises would need to be taken into account.
For those reasons he said he had avoided airline stocks and
retailers as consumers will feel the pressure of rising costs.
Kingfisher <KGF.L>, Europe's biggest home improvements
retailer, was the second top faller on London's blue-chip index,
down 0.5 percent.
RESULTS CHEER
Engineering firm IMI rose 5.9 percent after it reported a
slightly better than expected profit. []
Oil services and engineering group Amec gained 5.9 percent
after it beat forecasts with a 30 percent jump in earnings in
2010. []
BSkyB <BSY.L> added 2.1 percent after Rupert Murdoch's News
Corp <NWSA.O> took a huge step towards securing its prized $14
billion buyout of the broadcaster.
"With concerns over dwindling subscriber numbers, we imagine
that shareholders will be content with the deal," Atif Latif,
director of trading at Guardian Stockbrokers said.
Whitbread <WTB.L> rose 2.8 percent, rebounding from a fall
of more than 5 percent in the previous session after results, as
HSBC upgraded Britain's biggest hotel operator to "overweight"
from "neutral".
"For the time being, the FTSE appears to be trading in a
broad topping formation, with resistance around the 6,100 area
and support around the 5,840 area," said Michael Hewson,
technical analyst at CMC Markets.
On the economic front, growth in Britain's dominant service
sector slowed sharply in February, suggesting the economic
recovery might be too fragile for an early interest rate rise.
U.S. stock index futures pointed to a higher open on Wall
Street ahead of weekly jobless claims as well as on the
Institute for Supply Management's February non-manufacturing
index.
(Editing by Will Waterman)
