By Michael Taylor
LONDON, April 21 (Reuters) - Britain's blue-chip index clung
to early gains on Monday after a Bank of England plan to boost
liquidity failed to lift banking shares, while crude oil prices
boosted commodity shares and ITV <ITV.L> was buoyed on bid talk.
At 1009 GMT, the FTSE 100 <> was up 9.4 points, or 0.2
percent at 6,065.9, having touched a high of 6,089.5. The
blue-chip index has added more than 6 percent this month but is
down about 6 percent in 2008.
The big macro news was the Bank of England offering to swap
government bonds worth 50 billion pounds ($100 billion) for
banks' riskier mortgage debt in an effort to ease the effects of
a credit crunch on Britain's banking system.
It said it would allow banks to swap mortgage-backed bonds,
which have become hard to trade, for specially-issued Treasury
bills. []
Volatile banks were negative after dipping in and out of
positive territory, with Barclays <BARC.L>, HSBC <HSBA.L> and
HBOS <HBOS.L> down 0.7-2.2 percent.
Royal Bank of Scotland <RBS.L> slipped 2.7 percent as it was
set to announce Europe's biggest rights issue and some $10
billion of losses on investments this week. []
The bank was also considering selling assets, including a
train leasing business, and possibly its insurance arm.
But, with little on the UK corporate calendar, investors
will look across the Atlantic as the session progresses, to
first-quarter earnings from Bank of America <BAC.N>.
"There should be universal applause for the BoE special
liquidity scheme," said Howard Wheeldon, a senior strategist at
BGC Partners.
"However, it seems that initial reaction from financial
markets and those that the scheme is designed to assist appeared
somewhat diffident on the basis of cost in relation to risk.
"That suggests to me only the weakest banks may initially
take up what is on offer from the BoE and that larger banks may
stand aside for a while."
Among other UK sectors, heavyweight oil shares featured as
U.S. crude <CLc1> dipped below $117 a barrel. BP <BP.L> added
1.8 percent, Shell <RDSa.L> gained 1.8 percent and Tullow Oil
<TLW.L> tacked on 2.9 percent.
Shell was also boosted by a report in the Financial Times
which said it has sufficient oil reserves to provide 55 years of
production at current levels, citing Chief Executive Jeroen van
der Veer.
Mining stocks rose to track the oil price, with BHP Billiton
<BLT.L>, Xstrata <XTA.L> and Rio Tinto <RIO.L> adding between
1.1 and 2.4 percent.
ITV SETS THE PACE
ITV <ITV.L> soared 8.4 percent to top the FTSE 100
leaderboard after the Sunday Telegraph reported British pay-TV
firm BSkyB <BSY.L> has received expressions of interest in its
stake in ITV from European broadcaster RTL <AUDK.LU> and U.S.
billionaire Haim Saban [].
BSkyB, whose shares were flat, was not immediately available
for comment, while ITV declined to comment.
Persimmon <PSN.L> tacked on 1.2 percent after Panmure raised
its rating on the housebuilder's shares to "buy" from "hold".
Drugmaker AstraZeneca <AZN.L> was 2.2 percent higher after
Citigroup raised its price target to $48 from $46 with a "buy"
rating.
British Energy <BGY.L> was up 2.3 percent. The Sunday Times
reported French utility Suez <LYOE.PA> was one of seven firms
conducting due diligence on the British nuclear power operator
and could bid. []
Further on the downside, Friends Provident <FP.L> lost 2.4
percent. U.S. buyout group JC Flowers formally withdrew from its
3.5 billion pound pursuit of the UK life insurer late on Friday.
[]
(Additional reporting by Dominic Lau; Editing by David Hulmes)
