* Banks rise as investors put stress tests behind them
* BP gains ahead of potential changes to management
* Drugs weak; Glaxo falls on reported interest in Genzyme
By Tricia Wright
LONDON, July 26 (Reuters) - Britain's top share index was
flat at midday on Monday, as investors put the European stress
tests behind them to bid up banking stocks, while
GlaxoSmithKline led heavyweight drugmakers down.
At 1106 GMT the FTSE 100 <> index had inched up 1.16
points to 5,313.78, having closed 1.19 points lower on Friday.
Banks bounced back after declines on Friday, after the
European bank stress tests unearthed no nasty surprises.
Barclays <BARC.L> did best, adding 2.1 percent, with Lloyds
Banking Group <LLOY.L> and Royal Bank of Scotland <RBS.L> up 1.7
percent and 1.6 percent, respectively.
"(The market's) had a really good start to the third quarter
... a large part of which has been anticipation of a successful
outcome to the European bank stress tests," said Jim Wood-Smith,
head of research at Williams de Broe.
"Now that we've got there, the market's having a deep
breath," he said.
Only seven of 91 banks -- five small Spanish banks,
Germany's state-rescued Hypo Real Estate [] and Greece's
ATEbank <AGBr.AT> -- failed the tests, with an overall capital
shortfall of just 3.5 billion euros ($4.5 billion).
The shortfall was much smaller than the 30-100 billion euros
predicted by markets, though many European banks had already
raised capital during the financial crisis, and there remained
some scepticism that the stress tests on European banks were not
strict enough. [] []
Oil major BP <BP.L> was in demand, adding 2.1 percent, with
the company expected to announce changes at the top on Monday, a
day ahead of its second-quarter results, with the anticipated
departure of CEO Tony Hayward, who has been under heavy fire for
his handling of the massive oil spill in the Gulf of Mexico.
[]
Tullow Oil <TLW.L> was the biggest blue-chip riser, up 4.2
percent, after the oil explorer said it had found a major new
oil field off the coast of Ghana, raising hopes of further
discoveries off West Africa. []
Pearson <PSON.L> was another strong gainer, up 3.6 percent
after the educational technology provider and Financial Times
owner firmed up its full-year outlook after a strong first-half
showing from all its units. []
GLAXO WEIGHS
GlaxoSmithKline <GSK.L> fell 2.4 percent, topping the FTSE
100 fallers' list, after the Wall Street Journal on Sunday
reported that the drugmaker made a "very casual approach" to
Genzyme Corp <GENZ.O>, asking to be notified if Genzyme put
itself on the block. [] []
Peer AstraZeneca <AZN.L> was also weak, losing 1.4 percent
ahead of its second-quarter results due later this week.
Consumer products group Reckitt Benckiser <RB.L> shed 0.7
percent after the release of its second-quarter results, with
the stock having put in a good performance ahead of the numbers
following last week's takeover move for SSL International
<SSL.L>. []
On the second line, Connaught <CNT.L> plunged over 80
percent, topping the FTSE 250 <> fallers' board, as the
beleaguered social housing group said its net debt levels would
be significantly in excess of previously advised levels and
would breach its banking covenants. []
On the economic front, house prices in England and Wales
fell for the first time in 15 months in July, causing the annual
rate to weaken for the first time in over a year, property data
company Hometrack said on Monday. []
U.S. stock futures <.DJc1><SPc1> were a touch lower,
indicating a slightly lower start on Wall Street, with investors
awaiting June U.S. new home sales, due at 1400 GMT. Chicago's
Fed index is scheduled for release at 1230 GMT.
(Editing by Will Waterman)
