* FTSE flat, U.S. market closed for holiday
* BP deal with Rosneft boosts demand for energy stocks
* Smiths and S&N lifted by M&A hopes
By David Brett
LONDON, Jan 17 (Reuters) - Britain's top share index was
flat on Monday, supported by BP's <BP.L> tie-up with Russian
group Rosneft <ROSN.MM> which offset weaker mining stocks.
By 1158 GMT, the FTSE 100 <> was up 0.68 point at
6,002.75, having closed down 0.4 percent on Friday.
Technical analysts said recent movements on the FTSE 100
suggest a more bearish outlook in the short term.
"The index is now testing its 20 Day Moving Average
(5,978.52, according to Thomson Reuters data), which may support
the index but momentum is clearly showing signs of weakness
suggesting bearish moves are likely," Sandy Jadeja, chief
technical analyst at City Index, said.
Jadeja said a break below 5,950 could see the index trade
down towards 5,707, if weakness starts to set in.
BP rose 1.5 percent, adding most points to the index after
it agreed a $7.8 billion share swap with Rosneft, Russia's top
oil producer, late on Friday that will give the UK company
access to areas of the Arctic previously reserved for Russian
oil companies.
The deal helped lift sentiment in the energy sector
<.FTNMX0530>.
British engineering firm Smiths <SMIN.L> was the top gainer
in percentage terms, up 8.1 percent after rebuffing a 2.45
billion pound ($3.88 billion) cash bid approach for its medical
services unit late on Friday. []
"We're hearing that Apax have made a bid and that other
people are in the background, so the price could be pushed
higher," a London-based trader in the stock said.
DEAL TALK BOOSTS S&N
British artificial knee and hip maker Smith & Nephew (S&N)
<SN.L> climbed 3.9 percent after a weekend report that Johnson &
Johnson <JNJ.N> was considering a fresh takeover approach worth
at least 800 pence a share, which would value S&N at 7.12
billion pounds ($11.3 billion). []
Vodafone Group <VOD.L> added 1.6 percent as investors await
a deal for the British firm to dispose of its 44 percent stake
in French mobile operator SFR for between 7 to 8 billion euros.
Burberry <BRBY.L> rose 0.6 percent, fuelled by optimism
ahead of a trading update on Tuesday after Swiss peer Richemont
<CFR.VX> recorded double-digit growth in all business areas.
On the downside, exploration equipment maker Weir Group
<WEIR.L> shed 1.5 percent, with traders citing talk of a
potential bid for Swiss engineering group Sulzer <SUN.S>.
Miners <.FTNMX8350> remained hamstrung by concerns over
demand from China after the world's biggest consumer of raw
materials announced it was raising banks' required reserves by
another 50 basis points on Friday, a further sign of monetary
policy tightening.
"China is the powerhouse of demand and the economic
situation there is attracting a lot of attention, even though
its situation is one that most other countries would give an arm
and a leg for," Richard Hunter, head of UK equities at
Hargreaves Lansdown, said.
Investors locked in profits on banks <.FTNMX8350>, which
have enjoyed a good start to 2011 despite Europe's sovereign
debt problems lingering in the background.
The U.S. market was closed on Monday for the Martin Luther
King Jr Holiday.
(Editing by David Cowell)
