* Banks rebound after recent falls
* Commods higher; Morgan Stanley ups miners' targets
* BSkyB buoyant after Ofcom pay-TV ruling
By David Brett
LONDON, March 31 (Reuters) - Britain's top share index was
flat at midday on Wednesday as weak defensive stocks were offset
by rallying banks and commodities, and gains in BSkyB <BSY.L> as
investors welcomed an expected pay-TV review from Ofcom.
By 1108 GMT, the FTSE 100 <> index was up 2.71 points
at 5,675.03 having closed 0.7 percent lower on Tuesday and below
the 5,700 level for the first time in three sessions.
Volumes were thin with the FTSE 100 having traded just 24
percent of its average 90-day volume.
"The big hedge funds and pension guys are not playing at the
moment, which would indicate this latest rally that started in
February has been buoyed on lighter volumes," said Philip
Gillett, a sales trader at IG Index.
Miners were the biggest gainers on the index, helped by
Morgan Stanley lifting target prices on a number of stocks in a
sector review. Anglo American <AAL.L>, Xstrata <XTA.L>,
Fresnillo <FRES.L> and Antofagasta <ANTO.L> added 0.5 to 1.1
percent.
The sector also continued to feel the benefits from BHP
Billiton <BLT.L> and Brazil's Vale <VALE5.SA> deal with Japanese
steel mills on Tuesday, a move that signals the demise of
fixed-price annual contracts. []
Energy stocks BG Group <BG.L> and Royal Dutch Shell <RDSa.L>
added 1.2 and 0.1 percent respectively, as Deutsche Bank raised
price targets in the sector, and as the price of crude <CLc1>
rose to around $83 a barrel.
Tokyo Gas Co <9531.T> said it has agreed with BG Group to
buy liquefied natural gas from Australia's Queensland Curtis
project. []
Banks recovered some of the previous session's losses as
investors bought on the dips. Barclays <BARC.L>, Lloyds Banking
Group <LLOY.L> and Royal Bank of Scotland <RBS.L> rose 0.3 to
2.1 percent.
Anglo-Dutch consumer goods group Unilever <ULVR.L> also saw
good demand, up 1.8 percent after BofA Merrill Lynch upgraded
its rating to "buy" from "neutral", citing valuation grounds.
Mobile telecoms heavyweight Vodafone <VOD.L> moved higher
again, up 0.2 percent after recent press reports concerning
possible dividends from its U.S. wireless joint-venture with
Verizon <VZ.N>.
BSKYB CHEERED; DEFENSIVES DRAG
BSkyB was the top FTSE 100 riser, up 3 percent as Britain's
dominant pay-TV group said it will challenge regulator Ofcom's
ruling that it must make its premium channels showing sports
available to its rivals for a set, lower fee. []
More positively, Ofcom also said BSkyB could launch a
paid-for TV service on the Freeview digital terrestrial
platform, which would allow it to target customers who do not
have a satellite dish.
On the downside, defensively-perceived stocks were the main
drag on the blue chip index as some risk appetite returned to
the market on the last day of the first-quarter.
Food retailer Tesco <TSCO.L> fell 0.4 percent, Imperial
Tobacco <IMT.L> was down 0.9 percent, while heavyweight
drugmakers GlaxoSmithKline <GSK.L> and AstraZeneca <AZN.L> each
shed 0.4 percent.
The macro focus will move across to the Atlantic this
afternoon, with investors eyeing the March ADP national
employment survey, a precursor to Friday's all-important U.S.
non-farm payrolls.
March's New York ISM survey, Chicago PMI, February factory
orders, and the revised February durable goods orders will also
be released.
(Editing by Sharon Lindores)
