FTSE firmer as oil shares gain; HSBC, retailers up

                                
 By Michael Taylor
                                
 LONDON, May 12 (Reuters) - The UK's blue-chip FTSE index
<.FTSE> clung onto early gains on Monday as oil shares rose as
crude prices stayed near record highs, an update from HSBC
<HSBA.L> pleased investors and bid talk buoyed retail stocks.
                                
 By 1121 GMT the FTSE 100 was up 23.8 points, or 0.4 percent,
at 6,228.3, having hit 6,251.9, and was unaffected by data
showing British factory gate prices and producers' costs rose at
a record pace in April, as fuel and food costs soared.
                                
 Across the Atlantic, Wall Street stocks were set to open
higher after Friday's losses, while Japan's Nikkei <.N225>
closed in positive territory for the first time in three days.
                                
 Heavyweight oil stocks <.SXEP> continued to march higher as
U.S. crude <CLc1> remained at near-record levels. BP <BP.L> was
up 1.2 percent, Royal Dutch Shell <RDSa.L> tacked on 0.8
percent. Among the smaller stocks, Cairn Energy <CNE.L> climbed
4.6 percent to an all-time high of 35.12 pounds.
                                
 Also among advancing stocks, HSBC, Europe's biggest bank,
said first quarter profit was ahead of a year earlier as growth
in Asia and elsewhere helped counter another big hit for bad
debts on U.S. home loans [ID:nL1269188]. HSBC rose 1.9 percent.
                                
 HBOS <HBOS.L> added 0.6 percent and Standard Chartered Bank
<STAN.L> rose 0.5 percent, but Barclays <BARC.L> slipped 1.4
percent. Standard Life <SL.L> rose 0.9 percent after Citigroup
upgraded the stock to "buy" from "hold".
                                
 "We are certainly seeing a reflection of the power of sector
weightings within the index," said Jim Wood-Smith, head of
research at Williams de Broe.
                                
 "The weightings of oil stocks and miners is now so great
(compared with) some fairly mundane looking moves at the
individual stock level -- that it translates itself into a
50-basis-point rise in the whole index."
                                
 "It's mind-boggling how the market can be up, when you get
inflation data that bad," he said.
                                
 He added that a busy week on the economic calendar will be
dominated by CPI numbers in Europe and the U.S. Double click on
<ECON> for more.
                                
 Among the standouts, Kazakhmys <KAZ.L> shed 2.4 percent and
ENRC <ENRC.L> gained 2 percent after the former rejected a 7.05
billion pound ($13.8 billion) approach from ENRC late on Friday.
                                
 British Energy <BGY.L> lost 1.4 percent after attracting
interest only from EDF <EDF.PA> by last Friday's initial
proposal deadline, while the British government ruled out
selling the company to a lone bidder, The Daily Telegraph said.
                                
 
                                
 KINGFISHER BID TALK BUOYS SECTOR
                                
 Shares in Kingfisher <KGF.L> jumped more than 10 percent
before paring gains to be up 5 percent, as traders cited market
talk of private equity interest in the firm of 195-225 pence.
                                
 Kingfisher declined to comment.
                                
 Other retailers boosted by the positive sentiment included
Next <NXT.L>, Marks & Spencer <MKS.L> and Home Retail Group
<HOME.L>.
                                
 BT Group <BT.L> advanced 2.3 percent as analysts pointed to
weekend press reports that the company is in talks to sell its
British data centres to the U.S. computer firm Hewlett-Packard
<HPQ.N> for 1.5 billion pounds ($2.93 billion). [ID:nL11106586]
                                
 BT declined to comment.
                                
 Vodafone <VOD.L>, the world's largest mobile phone group by
revenue, was up 1.1 percent after a spokesman said on Sunday
that it has no intention of pursuing a bid for the South African
company MTN <MTNJ.J>. [ID:nBOM176247]
                                
 On a sparse day for corporate earnings, energy company
Centrica <CNA.L> was the standout, up 2.2 percent after it said
that, as expected, first-half group operating profit would be
materially below that of last year due to lower profitability at
its British Gas retail business. [ID:nL12432706]
                                
 Investors were also keeping a close eye for further news of
a major earthquake that shook China's Sichuan province.
 (Additional reporting by Rebekah Curtis; Editing by Louise
Ireland)