* FTSE 100 up 1 pct
* Lehman rescue talks buoy banking sector
* Commodity shares rise to track rising metal, energy prices
By Michael Taylor
LONDON, Sept 12 (Reuters) - Britain's blue-chip index rose
by midday on Friday, buoyed by commodity and travel sector
gains, while long-suffering banks pushed higher on hopes U.S.
investment bank Lehman Brothers <LEH.N> could be rescued.
By 1119 GMT the FTSE 100 <> had added 52.0 points, or 1
percent, at 5,370.4, a gain of 2.5 percent on the week although
the market remains down nearly 17 percent for the year.
Futures for U.S. indexes <SPc1> <<NDc1> also pointed to a
mostly higher open across the Atlantic, as Lehman and U.S.
officials discussed a number of options for the stricken bank,
including a complete sale, sources with direct knowledge of the
talks said late on Thursday.
Barclays gained 2.4 percent, seemingly shrugging aside the
talk it could be involved in a rescue for Lehman, while Lloyds
TSB <LLOY.L>, Royal Bank of Scotland <RBS.L> and Standard
Chartered <STAN.L> all added between 1.6 and 3.4 percent.
"It's simply a relief rally after New York turned around
dramatically overnight, although I don't believe it. I think
it's going to prove to be short-lived with the banks having
further to come down," said David Buick of BGC Partners.
"We're still going to be bouncing around like a cork in the
ocean over the next few months," Buik added.
Oil heavyweights BP <BP.L> and Shell <RDSa.L> added 0.5
percent and 0.7 percent respectively as U.S. crude prices <CLc1>
recovered to above $102 a barrel and the markets kept a watchful
eye on the path of Hurricane Ike.
As metal prices rose, mining stocks also supported the
upside, with Eurasian Natural Resources <ENRC.L>, Xstrata
<XTA.L>, Anglo-American <AAL.L>, Kazakhmys <KAZ.L> and BHP
Billiton <BHP.L> up between 5 percent and 8.1 percent.
"Miners are having a bounce which they were overdue," said
Paul Kavanagh a partner at stockbroker Killik & Co. "That is
clearly helping at the moment. Otherwise, the banks have a lot
of noise around them... but the shares seem to have found a
level and are in ranges at the moment."
"It's obviously a very serious situation for Lehman. Over
the next six months you're just going to see a series of
situations that need resolving or will be resolved for them."
TRAVEL FIRMS RISE
Further on the upside, TUI Travel <TT.L> and Thomas Cook
<TCG.L> tacked on 5.9 percent and 7.2 percent respectively after
the collapse of Britain's third-largest tour operator,
privately-owned XL Leisure, reduced competition in the holiday
market.
"Gradually the market is going to accept that capacity is
coming out of the market -- in banks, tour operators, estate
agents. That's really going to be the story over the next six
months," Kavanagh added.
But plumbing supplies firm Wolseley <WOS.L> was the worst
FTSE 100 performer, down 3.2 percent after Citigroup cut its
rating for the stock to "sell" from "hold" while leaving its
target unchanged at 310 pence.
The broker noted weaker housing conditions in all of the
group's markets, while Collins Stewart started its coverage of
Wolseley with a "sell" rating and 342 pence price target.
Retailers suffered again at the end of a week of
disappointing trading news and results, with Morrison
Supermarkets <MRW.L> down another 0.6 percent following
Thursday's first-half results, and Kingfisher <KGF.L> off 1.6
percent.
(Additional reporting by Jon Hopkins; editing by Simon Jessop)
