* FTSE 100 down 0.5 percent, but seen range-bound
* Energy stocks, banks retreat as mood sours
* Aviva jumps after report of RSA approach
By Simon Falush
LONDON, Aug 13 (Reuters) - Britain's top share index
retreated by midday on Friday, dragged down by weaker banks and
energy stocks as nerves on the state of the global economy kept
investors wary of buying cyclical equities.
But companies perceived as more resilient to economic
headwinds like tobacco stocks and pharmaceuticals gained ground
limiting overall losses.
The FTSE 100 <> was 24.70 points or 0.5 percent lower
at 5,241.36 by 1107 GMT, after rising 0.4 percent on Thursday.
Energy stocks took most points off the index as worries
about the outlook for demand returned to haunt investors.
Heavyweights BP <BP.L> lost 1.7 percent while Royal Dutch Shell
<RDSa.L> fell 1 percent.
German gross domestic product (GDP) grew 2.2 percent in the
second quarter when French GDP growth also exceeded forecasts,
but investors were more inclined to focus on the uncertain
outlook.
"People are shrugging off the short-term boost from the GDP
data and looking at the longer term where they see a darkening
macro economic environment," said Henk Potts, market strategist
at Barclays Wealth.
Banks, whose share prices tend to track investor appetite
for risk were weaker. Lloyds Banking Group <LLOY.L> fell 1.2
percent, while HSBC <HSBA.L> lost 2.2 percent.
Shares in miner Vedanta Resources <VED.L> fell 5.2 percent,
the top FTSE <> faller, as sources said the company was
close to finalising a deal to buy a majority stake in Cairn
Energy's <CNE.L> Indian unit, Cairn India <CAIL.BO>.
THIN, RANGEBOUND TRADE
But, as is typical in August, trade was thin and market
participants saw little prospect of significant moves from
current levels until the end of the holiday period.
"We are range-bound between 5,200 and 5,500 and there is not
likely to be a break out until trading is back to normal in
September," said Tim Whitehead, investment manager at
Redmayne-Bentley.
Aviva <AV.L> was the star British blue-chip performer,
jumping 4.4 percent after a report on Sky News that the insurer
has rebuffed a 5 billion pound bid from RSA Insurance Group
<RSA.L>. RSA fell 0.6 percent.
Defensive tobacco stocks and pharmaceuticals benefited as
investors rotated out of companies more geared to a stronger
economy. Imperial Tobacco <IMT.L> gained 0.9 percent while
GlaxoSmithKline added 0.5 percent.
Tui Travel <TT.L> gained 3.6 percent after Goldman Sachs
upgraded the stock to "buy" from "neutral" on valuation grounds.
Mid-cap peer Thomas Cook Group <TCG.L>, also upgraded by the
broker, added 3.4 percent.
U.S. inflation numbers will be the main focus in the
afternoon, with a 0.3 percent monthly increase forecast for the
July consumer price index after a 0.1 percent fall in June,
giving it an annual rise of 1.2 percent, up from 1.1 percent.
July U.S. retail sales numbers will be released at 1230 GMT,
while the first reading of the Reuters/University of Michigan
consumer sentiment index for August will be released at 1355
GMT.
(Editing by Sharon Lindores)
