* FTSE 100 rises 1.7 pct
* Crude prices fall sharply, easing inflationary pressure
* Banks rise on StanChart H1 results, Barclays life arm sale
* Wolseley top gainer on U.S. unit sale talk
By Dominic Lau
LONDON, Aug 5 (Reuters) - Britain's FTSE 100 <> rose 1.7 percent by
midday on Tuesday, as falling crude oil prices lifted sentiment, and banks
gained after Standard Chartered's <STAN.L> first-half results beat forecasts.
Banks were the top sectoral gainer on the index, which was up 90.7 points at
5,410.9 at 1036 GMT, snapping a three-session losing run. The FTSE 100 has
fallen 16 percent so far this year.
"We've seen this sort of 5,400-5,420 level capped the market yesterday and
on Friday. It may be difficult to see much more strength from where we are now,"
said David Jones, chief market strategist at IG Index.
"The chances are we could see some weakness from here. This is where we've
seen sellers come back in the last few days."
StanChart surged 4.9 percent after the emerging market-focused bank beat
analysts' forecasts with a 31 percent jump in first-half profit as growth in
Asia continued to outpace western economies and its wholesale banking arm grew
strongly. []
Barclays <BARC.L> advanced 5.5 percent after Swiss Re <RUKN.VX>, the world's
largest reinsurer, agreed to buy the UK bank's life assurance arm for 753
million pounds in cash.
Within the sector, Royal Bank of Scotland <RBS.L> added 5.6 percent, HSBC
<HSBA.L> strengthened 1.4 percent and Lloyds TSB <LLOY.L> soared 5.7 percent.
Lower oil prices <CLc1> eased inflationary concerns and may give central
bank policymakers some room to manoeuvre amid slowing global growth.
The U.S. Federal Reserve, however, is expected to keep interest rates
unchanged at 2 percent when it announces its verdict after the European market
close.
The Bank of England is due to announce its interest rate decision on
Thursday, when analysts also expecting the UK central bank to stand pat.
Britain's services sector shrank for a third straight month in July but the
pace of contraction slowed unexpectedly even as new business declined at the
fastest rate in the survey's 12-year history. []
Wolseley <WOS.L> topped the FTSE 100 gainers, soaring 13 percent after
traders cited market talk of a possible sale of its U.S. operations. Wolseley,
whose shares have been battered by a slump in the U.S. housing sector and
slowing UK property market, declined to comment.
ENERGY STOCKS SAG
Heavyweight oil shares, however, took a heavy beating, with crude prices
trading below $120 a barrel after hitting their peaks of $147 in mid-July.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L>, Cairn Energy <CNE.L>
and Tullow Oil <TLW.L> fell between 1.2 and 6.2 percent.
Weaker oil prices, however, soothed British Airways <BAY.L>, TUI Travel
<TT.L> and Thomas Cook <TCG.L>. They were up between 5.6 and 8.5 percent.
"If oil continues to weaken, it is a bit of a stimulus for the economy. It
takes the heat off bad debt for the banks," said Mike Lenhoff, chief strategist
at Brewin Dolphin.
"In a sense it's quite a welcome relief for economic activity and for
financials in particular and also for travel and leisure."
"We could see rotation away from resources into areas that have
underperformed and offer great value and high dividend yield," he said.
Legal & General <LGEN.L> surged 5.7 percent after the insurer posted a 6
percent rise in first-half operating profit, at the high end of forecasts, as
annuity sales more than offset the impact of a weakening economy on protection
and savings growth.
Rivals Prudential <PRU.L>, Old Mutual <OML.L>, Friends Provident <FP.L> and
Standard Life <SL.L> gained between 4 and 6.5 percent. The sector also got a
boost after Barclays's life assurance deal.
AstraZeneca <AZN.L> added 2.2 percent after UBS raised its price target on
the drugmaker.
SABMiller <SAB.L> rose 3.7 percent after Danish brewer Carlsberg <CARLb.CO>
beat expectations with its second-quarter earnings report.
Among mid-caps, Michael Page <MPI.L> jumped nearly 32 percent after the
recruitment company said it had received an unsolicited bid approach from
Switzerland's Adecco <ADEN.VX>.
(Additional reporting by Michael Taylor; Editing by Paul Bolding)
