* FTSEurofirst up 0.4 percent
* Banks, insurers rebound after heavy losses
* Oil hovers around $121, geopolitical risk grows
By Sitaraman Shankar
LONDON, Aug 22 (Reuters) - European shares rose by
mid-morning on Friday, boosted by a rebound in battered
financial stocks, but a robust crude price kept a lid on gains.
At 0900 GMT, the FTSEurofirst 300 <> index of top
European shares gained 0.4 percent to 1,159.75 points after
enduring a choppy morning.
Royal Bank of Scotland <RBS.L> added most points to the
index with a 2.9 percent gain, while BNP Paribas <BNPP.PA>, HSBC
<HSBA.L>, UBS <UBSN.VX> and Santander <SAN.MC> notched up gains
of 0.7-2.7 percent.
Oil <CLc1> hovered around $121, a day after its biggest jump
in 3 months on mounting tension between the United States and
Russia.
Russia, the world's second largest oil exporter, said on
Thursday that it would respond with more than just a diplomatic
protest to a U.S. deal with Poland to station parts of a U.S.
missile defence shield on Polish soil.
"Investors are realising that the bear has put its paw on
the pipeline, and geopolitical risk is likely to remain a theme
for the next month or so," said Justin Urquhart Stewart,
investment director at Seven Investment Management.
The uncertainty kept oil shares volatile, with heavyweights
trading down after an initial rise. Total <TOTF.PA> took most
points off the index with a 1.5 percent fall, while BP <BP.L>
fell 1 percent.
Miner Rio Tinto <RIO.L> underperformed after Australia's
competition regulator said it had deferred its final decision on
an around $128 billion bid by miner BHP Billiton Ltd <BHP.AX>
<BLT.L> for Rio.
Rio reversed early losses to tick up 0.3 percent and BHP
gained 1 percent.
Britain's FTSE 100 <> was up 0.9 percent, Germany's DAX
<> up 0.6 percent and France's CAC <> up 0.5 percent.
M&A LIFTS INSURERS, BERNANKE EYED
Aon Corp <AOC.N>, one of the world's largest insurance
brokers, made a recommended cash offer for Benfield <BFD.L> that
valued the UK-listed broker at 844 million pounds.
Benfield stock rose nearly 30 percent. Prudential <PRU.L>
gained 3.8 percent and Axa <AXAF.PA> rose 1.5 percent.
Investor focus shifts to a speech on financial stability
later in the day from Federal Reserve Chairman Ben Bernanke at
the Federal Reserve Bank of Kansas Economic Symposium.
"Bernanke will have to come up with some cuddly words to
negate some of the hyperbole of (former IMF chief economist
Kenneth) Rogoff," said Seven Investment's Urquhart Stewart.
Rogoff said on Tuesday that the worst of the global
financial crisis was yet to come and a large U.S. bank would
fail in the next few months as the world's biggest economy hits
more trouble.
Global equities have taken a battering over the past year
due to the credit crisis originating in the U.S. subprime
mortgage market, which has driven banks to make large writedowns
on investments and slowed the global economy.
The FTSEurofirst 300 is down 23 percent so far this year,
and on track in August for its ninth month of losses in the last
10.
Underlining investor concerns, revised official data showed
Britain's economy unexpectedly ground to a halt in the second
quarter, its weakest performance since the recession of the
early 1990s.
Euro zone June industry orders were down by 0.3 percent
month on month.
(Editing by Paul Bolding)
