* FTSE 100 up 0.5 pct; Arm leaps on bid talk
* Banks, miners rally; upbeat comments on U.S. economy
* BP down on dividend, litigation worries
By David Brett
LONDON, June 10 (Reuters) - Britain's top shares rose by
midday on Thursday, as gains in banks and miners on improved
economic sentiment outpaced losses in BP <BP.L>, hurt by worries
about costs associated with an oil spill in the Gulf of Mexico.
By 1002 GMT, the FTSE 100 <> was up 23.59 points, or
0.5 percent, at 5,109.45, having broken a three-day losing
streak on Wednesday, closing up 1.2 percent.
"The FTSE showed healthy signs of strength, as despite the
falls in BP, the miners and banks gradually drove the market
from the its lows into positive territory," Giles Watts, head of
equities at City Index.
Despite early falls as investor sentiment was weighed on by
BP concerns, banks rebounded, helped by positive comments made
by Federal Reserve Chairman Ben Bernanke on the U.S. economy
overnight and ahead of the latest interest rate decision from
the Bank of England due at 1100 GMT, at which no change is
expected.
Barclays <BARC.L>, HSBC <HSBA.L>, Lloyds Banking Group
<LLOY.L>, Royal Bank of Scotland <RBS.L> and Standard Chartered
<STAN.L> were up 0.5 to 2.2 percent.
The European Central Bank will also announce its interest
rate decision on Thursday, with the status quo expected to be
maintained as well when an announcement is made at 1145 GMT.
Miners were firmer along with metals prices as market
confidence was boosted after China reported a surge in total
exports in May, lifting the demand outlook. []
Fresnillo <FRES.L>, Rio Tinto <RIO.L> and Eurasian Natural
Resources <ENRC.L> added 2.1 to 2.7 percent.
Elsewhere, ARM Holdings <ARM.L> soared over 10 percent with
traders citing old rumours resurfacing of bid interest from
Apple <AAPL.O>.
A spokeswoman for ARM said it has not received an approach,
and said a takeover from Apple would not make sense.
ARM was also been benefiting from the launch of the new
iPhone and from strong sales from the new iPad, both of which
analysts say use ARM technology.
The talk boosted interest in mid-cap peers Imagination
Technologies <IMG.L>, in which Apple holds a stake, and CSR
<CSR.L> up 10.1 and 3.1 percent respectively, while small-cap
chipmaker Wolfson Microelectronics <WLF.L> climbed 3.9 percent.
BP BLUES
Oil major, BP was down 4 percent, having recovered from
early falls of over 11 percent, with investors' main concerns
surrounding the company's ability to pay its dividend and the
costs BP will have to assume to deal with liabilities related to
the disaster. []
The cost of the response effort to date has been around
$1.43 billion, the company said.
BP has shed as much as 45 percent of its value since the oil
began to spill on April 21, and hit its lowest level since April
1997.
"There is a feeling amongst investors that if BP can give
early decisive direction over the dividend issue preferably
before the Q2 results this could underpin the stock, and we
could see a rally from these levels," City Index's Watts said.
The ongoing problems continued to dent sentiment towards the
energy sector, with peers Royal Dutch Shell <RDSa.L> and BG
Group <BG.L> down 0.8 and 0.6 percent respectively, while oil
explorer Tullow Oil <TLW.L> shed 0.3 percent.
Meanwhile, Britain's No.1 household goods retailer Home
Retail Group <HOME.L> dropped 3.8 percent, the second biggest
FTSE 100 faller, after it posted a bigger than expected decline
in first-quarter sales.
(Editing by Hans Peters)
