* FTSE up 1.2 percent
* Commods gain, BP rises on well kill
* Food retailers higher, Bernstein sees inflation boost
By David Brett
LONDON, Sept 20 (Reuters) - Britain's top shares extended
gains by midday on Monday, led by energy shares after BP
permanently killed its deep-sea well in the Gulf of Mexico.
By 1039 GMT, the FTSE 100 <> was up 63.51 points, or
1.2 percent, at 5,571.96, rallying on recent falls, albeit in
thin trade with volumes at just 21 percent of their 90-day
average.
London's blue chips closed 0.6 percent lower on Friday, it's
third straight session of losses, hurt by weak economic data
from the United States and worries over Ireland's finances.
"We're seeing a continuation of the risk-on risk-off
strategy from investors," Jimmy Yates, head of equities at CMC
Markets, said.
He said the FTSE was priming itself for a second attack on
the significant 5,610 resistance level, having briefly flirted
with it on Friday before falling away sharply.
BP rose 1.7 percent after the top U.S. oil spill official
said on Sunday that the oil major had permanently "killed" the
Gulf of Mexico well that ruptured in April and unleashed the
worst oil spill in U.S. history. []
Energy stocks <.FTNMX0530> were the top performers on the
FTSE. British oil services and engineering group Amec <AMEC.L>
rose 1.8 percent, with Liberum Capital initiating coverage on
the firm with a "buy" rating.
Miners <.FTNMX1770> tracked base metal prices higher, as
gold edged close to a record high with investors keen on the
commodity as speculation remained of more quantitative easing in
the United States, following the weak data on Friday.
Precious metal miner Fresnillo <FRES.L> added 0.7 percent.
FOOD RETAILERS RISE
UK food retailers J Sainsbury <SBRY.L>, Wm Morrison
Supermarkets <MRW.L> and Tesco <TSCO.L> climbed 1.8-2.1 percent
after an upbeat note on the sector from Bernstein.
Bernstein said in a note: "The year to date rerating of the
(European food retail) sector only brings it in line with
historic averages; we expect further support from inflation and
increase price targets across the sector."
Testing equipment firm Intertek Group <ITRK.L> was the top
riser, up 3.0 percent after Seymour Pierce raised its rating to
"outperform" from "hold" as a read across from Swiss peer SGS's
<SGSN.VX> bullish update.
London's gains were underpinned by U.S. stock index futures
pointing to a firmer open on Wall Street.
Investors were focused on Tuesday's Federal Reserve interest
rate decision, though the U.S. central bank is not expected to
make any new monetary policy moves.
However, the post-meeting statement will be closely read for
signals on the debate about whether further large-scale asset
purchases are needed to support the sluggish recovery.
"There is still an underlying feeling in the bond market
that we will get further quantitative easing in the not too
distant future," Keith Bowman, analyst at Hargreaves Lansdown
said.
Banks <.FTNMX8350>, which are sensitive to slight changes in
risk appetite, were higher, with Barclays <BARC.L>, Lloyds
Banking Group <LLOY.L> and RBS.L <RBS.L> up from 1.4 to 1.6
percent, all helped by target price upgrades from JPMorgan
Cazenove.
Top FTSE fallers were recent arrivals pump manufacturer Weir
Group <WEIR.L> and insurance buyout vehicle Resolution <RSL.L>,
which fell 1.4 and 2.1 percent respectively, after a strong run
prior to their entry to the FTSE 100 at the index's latest
reshuffle.
(Editing by Jon Loades-Carter)
