By Dominic Lau
LONDON, May 7 (Reuters) - Britain's FTSE 100 <> index
rose by midday on Wednesday as near record high crude prices
lifted oil shares and banks reversed earlier losses, offsetting
weakness in miners.
By 1032 GMT, the UK's blue-chip index was up 40 points, or
0.6 percent at 6,255.2 after ending the previous session flat.
The FTSE 100 has risen 15 percent since March 17 when the index
hit its year's lowest closing level, but it is still down 3
percent for the year.
"The market is being supported by good news from America ...
Following all these doom and gloom stories and banks reporting
terrible losses, we have got through the majority of the
reporting season and everyone breathes a sigh of relief," said
Angus Campbell, head of sales at Capital Spreads.
"The flipside of that is of course these oil prices are
continuing to rise... Eventually consumers are going to be
really prevented from spending any disposable income. That will
eventually eat into company's margins."
Strong crude prices <CLc1> helped pump heavyweight oil and
gas shares higher, with BP <BP.L> and Royal Dutch Shell <RDSa.L>
up between 1.1 and 1.9 percent.
Cairn Energy <CNE.L> advanced 3.4 percent after index
provider MSCI Barra added the stock to its MSCI World Index
<.MIWD00000PUS>.
Miners, however, tracked metal prices lower, with BHP
Billiton <BLT.L>, Rio Tinto <RIO.L>, Kazakhmys <KAZ.L>, Lonmin
<LMI.L>, Anglo American <AAL.L>, Xstrata <XTA.L>, Vedanta
Resources <VED.L> and Antofagasta <ANTO.L> losing 0.2 to 3.3
percent. Antofagasta also traded without the rights to dividend.
The Bank of England begins a two-day meeting on Wednesday
and will announce its interest-rate verdict at 1100 GMT on
Thursday.
UK banks rose after Fannie Mae <FNM.N>, the largest U.S.
home finance company, said on Tuesday that the worst of the
credit market turmoil erupting from the real estate slowdown may
have passed.
Barclays <BARC.L> put on 0.5 percent, HSBC <HSBA.L> added 1
percent, HBOS <HBOS.L> climbed 3 percent, Alliance & Leicester
<ALLL.L> advanced 0.5 percent and Lloyds TSB <LLOY.L> rose 1.8
percent.
Housebuilders were also in demand ahead of the BoE decision
and after shares in the largest U.S. homebuilder, D.R. Horton
<DHI.N>, jumped 5.5 percent overnight.
Persimmon <PSN.L> climbed 4.4 percent, while Taylor Wimpey
<TW.L> and Barratt Developments <BDEV.L> both gain more than 5
percent. Bovis Homes <BVS.L> rebounded 2.8 percent, after losing
similar margin in the previous session when it issued a profit
warning.
Building materials distributor Wolseley <WOS.L>, which earns
half of its revenues in North America, was 3.7 percent higher.
BAT SMOKING
British American Tobacco <BATS.L> rose 1.9 percent after the
world's second-biggest cigarette maker posted a 17 percent rise
in first-quarter earnings, boosted by a weak pound, and said
2008 had got off to a great start. []
Rival Imperial Tobacco <IMT.L> strengthened 1.9 percent.
International Power <IPR.L> shed 1.4 percent. The company
said it would issue a bond to raise around 500 million euros
($774 million), and said trading for the year was in line with
expectations.
AstraZeneca <AZN.L> was up 1.4 percent after its chief
executive said sales trends for its ulcer pill Nexium had been
"consistent" since the company said rising competition from
generics had hurt sales of that treatment.
Liberty International <LII.L> dropped 2.1 percent after the
property company said its net asset value per share fell to
1,181 pence in the quarter ended March, from 1,264 pence,
reflecting unsettled UK property market conditions.
The stock also traded without the rights to a dividend.
Bunzl <BNZL.L>, Old Mutual <OML.L>, Rexam <REX.L> and
Whitbread <WTB.L> also fell after going ex-dividend.
(Additional reporting by Rebekah Curtis and Michael Taylor)
(Editing by Richard Hubbard)
