* FTSE 100 <> up 0.5 pct at midday
* Energy firms gain on firmer oil prices
* Defensive stocks in focus
By Harpreet Bhal
LONDON, June 16 (Reuters) - Advancing energy firms pushed
Britain's top share index up 0.5 percent by midday on Tuesday as
oil prices rebounded, while defensive stocks were also in demand
on growing caution over the pace of economic recovery.
By 1050 GMT the FTSE 100 <> was up 21.27 points at
4,347.28 after two days of losses saw it touch a six-week
closing low on Monday when it shed 2.6 percent.
The index has surged 25.5 percent since hitting a six-year
trough in March, supported by demand for banks, miners and
energy stocks, fuelled by the view that a global economic
recovery may come sooner than previously thought.
The FTSE is still down 1.9 percent for the year, however,
and analysts warn that the recent rally in stock prices may have
been overdone and further weakness is likely.
"We haven't really seen a major bout of consolidation since
(the lows in March). The time really has come for that to
happen," said Mike Lenhoff, chief strategist at Brewin Dolphin
Securities.
"You have had the lead from financials and cyclicals. They
have done incredibly well and now there is a recognition that
perhaps they have done their stuff for the next short while," he
said.
After heavy losses on Monday, energy stocks recovered some
ground as crude prices stabilised at near $71 per barrel.
Royal Dutch Shell <RDSa.L>, Tullow Oil <TLW.L> and BP <BP.L>
added between 0.5 percent and 1.3 percent.
Banks also gained after sharp losses on Monday. Standard
Chartered <STAN.L>, Royal Bank of Scotland <RBS.L>, Barclays
<BARC.L> and Lloyds Banking Group <LLOY.L> added 1.1 to 4.8
percent, but heavyweight HSBC <HSBA.L> slipped by 0.3 percent.
DEFENSIVES SOLID
Defensive pharmaceutical and tobacco stocks were well
supported as investors looked to assets perceived as safe bets.
GlaxoSmithKline <GSK.L> gained 1.3 percent and British American
Tobacco <BATS.L> climbed 0.7 percent. Vodafone <VOD.L> gained
1.5 percent.
Data showing consumer prices in Britain slowed much less
than expected in May supported the view that the UK's struggling
economy may be supported by rising consumer spending.
The Office for National Statistics said consumer prices rose
0.6 percent on the month in May, taking the annual rate to 2.2
percent from 2.3 percent in April, but above analysts forecasts.
[]
This pushed the pound to its highest level against the euro
this year <EURGBP=>, but stock market reaction was muted.
Miners were still under pressure as metal prices stayed well
below peaks since late 2008 set last week.
BHP Billiton <BHP.L> , Anglo American <AAL.L> and Kazakhmys
<KAZ.L> fell between 1.7 and 2.6 percent as metals prices turned
negative.
Rio Tinto <RIO.T> lost 1.9 percent after the firm said it
expects weak commodity markets to continue to hit its bottom
line as it launched a $15.2 billion rights offer, the world's
fifth largest share issue.
Tesco <TSCO.L> gained 1.4 percent after Britain's largest
retailer met forecasts to post a 9.7 percent rise in
first-quarter UK sales.
BT Group <BT.L> added 4.4 percent after Morgan Stanley
upgraded the telecoms stock to "overweight" and increased its
price target, while Serco Group was also among the top gainers,
up 3.2 percent after UBS upgraded the stock to "buy".
(Reporting by Harpreet Bhal; Editing by Hans Peters)
