* FTSE 100 up 0.4 pct
* Miners dip as metal prices weaken
* Banks, retailers boost as oil eases inflationary pressures
By Michael Taylor
LONDON, Aug 15 (Reuters) - Britain's benchmark index edged
up by midday on Friday as falling U.S. crude eased inflationary
fears, while mining stocks weighed as metal prices headed south.
At 1003 GMT the FTSE 100 <> advanced 21.2 points, or
0.4 percent at 5,518.6 to extend a 0.9 percent rise in the
previous session.
As U.S. crude <CLc1> prices slipped toward $112 a barrel,
investors saw hope for a future interest rate cut from the Bank
of England (BoE).
The BoE raised hopes on Wednesday of an interest rate cut
before year-end as it forecast the current record-breaking spike
in inflation would reverse sharply as the economy grinds to a
halt.
Banks led the upside, with Royal Bank of Scotland <RBS.L>,
Barclays <BARC.L> and Lloyds TSB <LLOY.L> all trading positive
as the sector accounted for over 9 positive index points.
Bradford & Bingley <BB.L> was up 0.9 percent after the close
its 400 million pounds rights issue.
Retailers also rose as the inflationary threat weakened,
with Next <NXT.L>, Kingfisher <KGF.L> and Carphone Warehouse
<CPW.L> up 2.8-3.5 percent.
Heavyweight oil companies were mixed, with BP <BP.L> and
Royal Dutch Shell <RDSa.L> up 0.3 and 0.7 percent respectively,
while Tullow Oil <TLW.L> shed 0.6 percent.
"The equity market has taken heart from recent sharp falls
in commodity prices," said Charles Stanley analysts in a note.
"Nevertheless, the catalyst for these falls is the global
economic slowdown and investors still need to take this on board
in terms of the outlook for corporate earnings."
Sterling struck a 22-month low against the dollar, and the
euro hit a six-month low against the U.S. currency.
Separately, in a note to clients, UBS analysts cut their
FTSE 100 target for this year from 6,500 to 6,100, and set a
target of 6,500 for 2009.
"The move is based on a top-down earnings growth forecast of
3.6 percent this year and a fall of 4.1 percent in 2009," the
UBS analysts said.
The falling energy prices helped buoy British Airways
<BAY.L>, FirstGroup <FGP.L> and Carnival <CCL.L>, traders said,
with the travel companies rising 1.7-4.1 percent.
RSA Insurance Group <RSA.L> extended large gains from the
previous session to rise 1.8 percent on vague press reports of a
possible bid for the company. RSA declined to comment.
MINERS DOWN
On the downside, mining companies tracked falling metal
prices <MCU3> <MZN3> with Antofagasta <ANTO.L>, Kazakhmys
<KAZ.L>, Xstrata <XTA.L> and Anglo American <AAL.L> down 3.5-4.8
percent.
Vodafone <VOD.L> slipped 0.1 percent. The Financial Times
said it was in talks with TDC <TDC.CO>, Denmark's leading
telecommunications company, about buying part of its stake in
Polkomtel, Poland's second-biggest mobile phone operator.
Among midcaps, British recruitment company Michael Page
International <MPI.L> dipped 5.3 percent after it rejected an
approach worth 1.3 billion pounds ($2.43 billion) from Swiss
rival Adecco, saying it materially undervalued the company.
[]
"As far as oil goes ... we've moved into a very new world
and I don't think it's right to take a view that the oil price
can be sustainable at below $100," said Howard Wheeldon, senior
strategist at BGC Partners.
"We may be lower for a bit but you should still expect oil
hovering closer -- and hopefully remaining -- to $120 and
perhaps we can begin to live with that," he added.
Many European markets are closed or are suffering weaker
trading volumes due to Assumption Day.
Traders hoped U.S. industrial production and capacity
utilisation data for July and the Reuters/University of Michigan
August preliminary consumer sentiment, due from 1315 GMT, would
offer market direction as the session progresses.
(Additional reporting by Dominic Lau; Editing by David Cowell)
