* FTSE 100 index up 0.3 percent
* Relief rally lifts BP
* Drugmakers, tobacco stocks weaker
By Tricia Wright
LONDON, June 18 (Reuters) - Britain's top share index was
higher at midday on Friday, boosted by gains from BP <BP.L> on
relief over its compensation deal with the White House as well
as mining stocks.
At 1118 GMT, the FTSE 100 <> was up 14.42 points, or
0.3 percent, at 5,268.31, after it closed up 0.3 percent on
Thursday, taking its winning streak into a seventh straight
session.
"There is not a great deal driving investors today, really.
They are on wait-and-see mode ahead of next week's (British)
budget and that is probably going to be the key short-term
driver," said Henk Potts, market strategist at Barclays Wealth.
"Then you have got to wait for the next quarterly reporting
season. We still believe the corporate position remains strong
despite dark clouds at the macro environment."
BP rose 3.1 percent, extending its rally from Thursday as
investors welcomed the company's concrete plans to cope with the
Gulf of Mexico oil spill, including a $20 billion escrow account
to pay damage claims and a suspension of dividend payments.
Sentiment in the oil giant was also helped by an upgrade to
"buy" from "hold" from Societe Generale.
Mining stocks found favour, bouncing back after falls in the
previous session, as investors hoped for a compromise on a
proposed Australian tax on mining profits, with Xstrata <XTA.L>
and BHP Billiton <BLT.L> up 1.5 and 1.3 percent, respectively.
Precious metal miners Fresnillo <FRES.L> and Randgold
Resources <RRS.L> stood out, up 2.9 percent and 1.6 percent,
respectively, as gold held within reach of record highs in
Europe.
Banks built on their rise in the previous session, with
Royal Bank of Scotland (RBS) <RBS.L> the best off, up 1.2
percent, after Spanish bank Santander <SAN.MC> confirmed it had
made an offer for about 300 RBS branches in Britain.
Among individual movers, Aviva <AV.L> gained 1.3 percent as
JPMorgan upgraded its rating for the insurer to "overweight"
from "neutral", and hiked its target price to 509 pence from 285
pence.
DEFENSIVES PRESSURED
With risk appetite improving slightly, defensive stocks like
drugmakers and tobacco companies were under pressure, with
GlaxoSmithKline <GSK.L> down 1.6 percent and British American
Tobacco <BATS.L> off 0.9 percent.
Strike-threatened telecom firm BT Group <BT.L> fell 1.7
percent, topping the list of FTSE 100 fallers. The Communication
Workers Union is prepared for drawn-out industrial action at BT,
in a bid to secure an improved pay offer for its members, the
Financial Times reported. []
Capita <CPI.L> and Serco <SRP.L> were off 1.6 and 0.9
percent respectively after UBS cut its rating for both
outsourcing groups.
Tesco <TSCO.L> slipped 1.1 percent. The retailer could face
a revolt over executive pay after investor lobby groups urged
shareholders to vote against the company's remuneration report
at its July 2 annual meeting.
Britain's budget deficit came in lower than expected in May,
another sign the worst is now over for public finances.
The Office for National Statistics said on Friday the
public sector posted a net cash requirement of 11.963 billion
pounds last month, below forecasts for a reading of 20.25
billion. []
(Editing by Karen Foster)
