By Michael Taylor
LONDON, June 3 (Reuters) - Britain's blue-chip shares dipped
into negative waters midway through Tuesday's seesaw session,
pulled down by miners, while stake building chatter buoyed Royal
Bank of Scotland <RBS.L> after the sector's slump on Monday.
At 1112 GMT, the FTSE 100 <> was down 9.9 points, or
0.2 percent at 5,997.7, with investors starting to turn their
attentions to the Bank of England's (BoE) interest rate decision
on Thursday.
The central bank's Monetary Policy Committee is widely
expected to leave interest rates at 5 percent as it grapples
with a combination of slowing growth and rising price pressures.
Despite metal prices rising, Kazakh mining group ENRC
<ENRC.L> fell 3.8 percent to top the FTSE 100 decliners as
traders cited market talk that takeover rival Kazakhmys <KAZ.L>
may sell its stake in the company.
Kazakhmys, which shed 0.2 percent, was not immediately
available for comment.
Banking shares again featured heavily on Britain's benchmark
index, one day after troubled lender Bradford & Bingley <BB.L>
fell 24 percent after it slashed the price of its emergency
fundraising to secure a private equity lifeline and issued a
profit warning.
"The banking section was very weak yesterday and inevitably
after a period of weakness you get a very-short term relief the
following day," said Edward Menashy, an economist at Charles
Stanley.
Royal Bank of Scotland (RBS) topped the FTSE 100 leaderboard
and added 4.2 percent as traders cited market talk of buying by
British activist fund the Children's Investment Fund (TCI), and
a short squeeze ahead of the bank's rights issue deadline on
Friday.
RBS declined to comment, while TCI was not immediately
available for comment.
Dresdner analysts said in a note that they had a growing
feeling that the recent RBS pressure was driven by technical
issues.
"Today we add the stock to our core portfolio. Still a
reduce as the fundamental outlook remains unappealing, but with
a growing chance of a strong rebound," Dresdner analysts said.
Among other lenders, Lloyds TSB <LLOY.L> advanced 1.5
percent, while HBOS <HBOS.L>, while Barclays <BARC.L> and HSBC
<HSBA.L> lost 0.4-2.1 percent.
BANKS ASIDE
Further on the upside, British Energy <BGY.L>, whose shares
rose over 3 percent on Monday, tacked on 1.8 percent on
persistent market talk of bid interest.
Home Retail <HOME.L> advanced 2.9 percent after Seymour
Pierce raised its rating to "buy" from "hold". Fellow retailer
Carphone Warehouse <CPW.L> rose 3.5 percent.
Among the few companies reporting, United Utilities <UU.L>
gained 0.9 percent after it said full-year underlying operating
profit rose 7 percent and said a 1.5 billion pound hand-out to
shareholders will take place in August.
"People are just looking either side of the banking sector
and the fallout thereof," said Les Ames, a trader at WH Ireland.
"We have people like (U.S. financier George) Soros coming in and
telling us that there is greater damage to be reaped on the
banking sector. It is a bit scary."
"Whether the market is easier or not, there are trading
opportunities -- United Utilities has been one today. It's not
the end of the world, the resilient will survive."
Airlines were mixed after Ryanair Holdings <RYA.I> posted a
20 percent rise in full-year net profit but warned that if oil
prices stay at around $130 a barrel it would only expect to
break even in the year to the end of March 2009.
British Airways <BAY.L> shed 1.1 percent, while easyJet
<EZJ.L> was up 1.1 percent.
BG Group <BG.L> rose 1.6 percent as Brazil's state oil
company Petrobras was set receive the first shipment of
liquefied natural gas for its Pecem terminal in July, which is
supplied by the British company.
AMEC <AMEC.L>, the international engineering and project
management company advanced 3 percent after it entered into an
agreement with BP International Limited to provide engineering
and project management services for BP's offshore developments
around the world.
(Additional reporting by Dominic Lau and Rebekah Curtis)
