FTSE flat at midday; miners, oils up; banks weak

                                
 * Oils rally after recent sector earnings reports
                                
 * Miners higher; copper price rises
                                
 * Banks down on profit-taking ahead of stress tests
                                
 * Trade moribund with European markets shut 
                                
 
                                
 By Jon Hopkins
                                
 LONDON, May 1 (Reuters) - Britain's top shares were flat at
midday on Friday, treading water in very thin trade after sharp
gains in the previous two sessions, with rallies by oils and
miners countering profit-taking in banks and defensives.
                                
 With other European markets closed for a holiday, the FTSE
100 <.FTSE> index was 4.54 points, or 0.1 percent, lower at
4,240.17 at 1107 GMT, after gaining 1.3 percent on Thursday to
post its biggest monthly percentage rise since 2003.
                                
 The pan-European FTSEurofirst 300 <.FTEU3> index was flat
with only its UK components being traded.
                                
 Major continental European markets were closed for the May
Day holiday, while the UK shuts for a bank holiday on Monday.
                                
 "The London market has managed to come back to an even keel
from initial calls for a softer day," said Manus Cranny, senior
market commentator for MF Global Spreads.
                                
 "The brave have a strong belief that Swine Flu is all but a
nasty cold that is unlikely to decimate the market, although
that can turn on a dime."
                                
  "With the sun shinning and a scorcher of a May bank holiday
on the way there is little or no interest in playing with volume
today," Cranny added.
                                
 Oil issues were firmer after a week of above-forecast
quarterly earnings, although crude prices eased <CLc1>. BP
<BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L>, Tullow Oil
<TLW.L> and Cairn Energy <CNE.L> gained 0.8 to 2.2 percent.
                                
 Miners moved higher as metal prices firmed, with copper
<MC3> rising more than 2 percent to hit one-week highs on
Friday. Kazakhmys <KAZ.L>, Vedanta Resources <VED.L>,
Antofagasta <ANTO.L>, Eurasian Natural Resources <ENRC.L>, and
Xstrata <XTA.L> added between 2.6 and 5.6 percent.
                                
 Platinum miner Lonmin <LMI.L> took on 2.4 percent helped as
well by an Investec upgrade to "hold" from "sell".
                                
 A broker upgrade also provided a lift for BAE Systems
<BAES.L>, up 1.9 percent as Morgan Stanley raised its stance to
"overweight" from "equal-weight".
                                
 
                                
 SLOWER CONTRACTION
                                
 Britain's manufacturing sector contracted at its slowest
pace in 8 months in April, as the weak pound helped support new
orders, a survey showed on Friday.
                                
 The CIPS/Markit manufacturing purchasing managers' index
improved to 42.9 in April from an upwardly revised 39.5 in
March. Analysts had expected a more modest improvement to 40.0.
                                
 "This is a major gauge for economists and back-to-back
positive results will reignite talk of 'green shoots'. It would
be unwise to read too much into this, but the figures are at
least going in the right direction which is something we haven't
had for a while," said Rob Pike, head of trading at
ShortsandLongs.com.
                                
 Banks took the most points off the FTSE 100 index, reversing
some of their recent recovery on profit-taking ahead of the U.S.
stress test results due next week and after further criticism of
the industry in a UK Treasury Select Committee report.
                                
 Barclays <BARC.L>, one of the biggest gainers this week,
lost 3.1 percent, HSBC <HSBA.L>, Standard Chartered <STAN.L> and
Lloyds Banking Group <LLOY.L> fell between 0.5 and 3.1 percent.
                                
 Lloyds said its top executive would get no salary increase
this year, and could be forced to repay any bonuses they
receive. [ID:nLU614683]
                                
 Royal Bank of Scotland <RBS.L> bucked the downward trend,
however, adding 1.9 percent having lagged the sector rally.
                                
 Tobacco stocks were also a drag as recent defensive
attractions faded, with Imperial Tobacco <IMT.L> and British
American Tobacco <BATS.L> losing 2.1 and 1.3 percent
respectively.
                                
 Drug majors also fell, with AstraZeneca <AZN.L> shedding 1.3
percent and GlaxoSmithKline <GSK.L> falling 0.5 percent.
                                
 Travel issues suffered again from Swine Flu concerns again
with Intercontinental Hotels <IHG.L> down 2.5 percent, while
tour operators Thomas Cook Group <TCG.L> and TUI Travel <TT.L>
lost 0.3 and 0.7 percent, respectively.
                                
 Mexico started to shut down parts of its economy to slow the
spread of the new flu strain as more cases were found in the
United States and officials urged increased precautions against
an imminent pandemic.
                                
 (For more on the flu, double click on [nFLU])
                                
 (Editing by Simon Jessop)