FTSE eases as weak banks offset oil, miner gains

                                
 * Banks weak on fundraising uncertainties
                                
 * Oils, miners up as commodity prices stabilise
                                
 * Friends Provident up on takeover deal
                                
 * International Power boosted by results
                                
 
                                
 By David Brett
                                
 LONDON, Aug 11 (Reuters) - Britain's top share index slipped
0.1 percent by mid-session on Tuesday as weakness in banks
offset gains in energy majors and miners, while insurer Friends
Provident rose after agreeing a takeover offer.
                                
 By 1010 GMT, the FTSE 100 <.FTSE> was down 4.63 points to
4,717.57, easing back after hitting a 10-month closing high of
4,731.56 on Friday.
                                
 "With little doubt, the big story of the day so far has been
Friends Provident's acceptance of the revised bid offer by
Resolution, adding further weight to the arguments that a return
to normality for financial markets remains on the cards," said
Philip Gillet, sales trader at IG Index.
                                
 Friends Provident <FP.L> was 1.9 percent higher, after
Resolution <RSL.L> announced a 1.86 billion pound takeover that
valued the life insurer at a 6 percent premium to Monday's
closing price. [ID:nLB614001]
                                
 Resolution lost 2.8 percent after the announcement.
                                
 Other life insurers shed Monday's gains as the rest of the
sector saw profit takers move in. Old Mutual <OML.L> dropped 3
percent, Aviva <AV.L> was 2.4 percent lower and Prudential
<PRU.L> lost 1.7 percent.
                                
 Banks were the biggest drag on blue chips, with Barclays
<BARC.L>, Lloyds Banking Group <LLOY.L>, Royal Bank of Scotland
<RBS.L> and HSBC <HSBA.L> falling between 0.8 and 6.1 percent.
                                
 "The financial sector in general is struggling, with Lloyds
sitting around 5 percent lower as the spectre of a 15 billion
rights issue continues to weigh," said Gillet.
                                
 The government is close to hammering out an agreement about
how to insure loans granted to Royal Bank of Scotland and Lloyds
Banking Group under its 580 billion pound asset protection
scheme, the Guardian newspaper reported.
                                
 InterContinental Hotels <IHG.L> fell 1 percent as the
world's biggest hotelier moved to cut costs further as it warned
of tough trading through the rest of 2009 and reported a 38
percent drop in first-half profit. [ID:nLB610779]
                                
 TUI Travel <TT.L> fell 0.7 percent ahead of its
third-quarter results on Wednesday. Its German owner TUI AG
<TUIGn.DE> said it was preparing to give its former container
shipping unit Hapag-Lloyd a further 420 million euros, people
familiar with the situation told Reuters. [ID:nLB519486]
                                
 
                                
 COMMODITIES FIRM
                                
 Oil majors were the biggest gainers on the index, with BP
<BP.L>, Cairn Energy <CNE.L>, Royal Dutch Shell <RDSa.L> and
Tullow Oil <TLW.L> up 0.6-1.7 percent as crude prices hovered
around $71 a barrel <CLc1>.
                                
 Mining companies were up as metals prices remained in
positive territory. Anglo American <AAL.L>, BHP Billiton
<BLT.L>, Rio Tinto <RIO.L>, Vedanta Resources <VED.L> and
Xstrata <XTA.L> added between 0.2 and 1 percent.
                                
 Power generation firm International Power <IPR.L> was the
top riser, up 6.5 percent, after it reported a 12 percent rise
in profits as currency translation effects helped to offset
challenging U.S. and British markets. [ID:nLA452303]
                                
 Other individual risers included Smith & Nephew <SN.L>,
which added 1.5 percent, after Morgan Stanley raised the medical
device maker to "equal-weight" from "underweight" and upped its
price target to 504 pence from 463 pence.
                                
 Diageo <DGE.L>, the world's biggest spirits firm, gained 1.4
percent on the back of Deutsche Bank upgrading the stock to
"buy" from "hold".
                                
 On the economic front, the decline in British house prices
softened further, according to government data, which showed a
10.7 percent decline on the year in June, after a 12.7 percent
annual decline the month before. [ID:nONS004422]
                                
 The numbers followed news overnight from the Royal Institute
of Chartered Surveyors which said there is growing evidence that
market conditions in England and Wales are stabilising after the
financial crisis and recession. [ID:nLAG003667]
                                
 British retail sales rose last month compared with a weak
July last year, a survey showed on Tuesday, after changeable
weather helped seasonal clothing lines, food and homeware sales.
[ID:nLAG003666]
                                
 Analysts said the market will take its direction this week
from UK economic data and the U.S. Federal Reserve two-day
interest rate-setting meeting, which concludes on Wednesday.
 (Editing by Jon Loades-Carter)