* Banks recover after BoE inflation report
* Energy stocks firmer as crude stabilises
* Miners mixed awaiting FOMC outcome
By Tricia Wright
LONDON, Aug 12 (Reuters) - Britain's top share index rose in
midday trade on Wednesday, as the market breathed a sigh of
relief after the Bank of England's inflation report, with energy
and banking stocks among the biggest blue-chip gainers.
By 1105 GMT, the FTSE 100 <> index was up 19.67 points,
or 0.4 percent, at 4,691.01, after closing down 1.1 percent on
Tuesday, its biggest fall in a fortnight after hitting 2009
highs on Friday.
British inflation will be well below the 2 percent target in
two years if interest rates rise in the first quarter, the Bank
of England said, suggesting markets are pricing in rate hikes
too early. []
British unemployment hit its highest rate since 1996 in the
three months to June, official figures showed, while the number
of people claiming jobless benefit rose broadly as expected in
July. []
Banks were among the top blue-chip risers, rebounding after
falls earlier in the session, as investors' attention shifted
away from ongoing fears of potential cash calls in the sector to
positive noises from the inflation report.
Lloyds Banking Group <LLOY.L> was the best off, up 5.4
percent, while Royal Bank of Scotland <RBS.L>, Standard
Chartered <STAN.L> and Barclays <BARC.L> rose 0.2 to 5.2
percent.
"I suspect that the fact that (BoE governor) King has said
there continues to be scope to change his policy if necessary
may well be playing into the banks' hands, " said Richard
Hunter, head of UK equities at Hargreaves Lansdown.
Lloyds, which was reported as considering a multi-billion
pounds share offering at the weekend, said it would sell the
bulk of its Insight Investment unit to Bank of New York Mellon
<BK.N> for 235 million pounds. []
Oil stocks added the most points to the FTSE 100 as crude
prices <CLc1> stabilised around $69, with BG Group <BG.L> adding
3 percent, supported by an ING upgrade to "hold" on valuation
grounds, while Royal Dutch Shell <RDSa.L> gained 1.7 percent,
and Tullow Oil <TLW.L> climbed 2.1 percent.
It was a mixed picture among the miners, amid concerns over
the strength of any global economic recovery ahead of comments
from the Fed.
Antofagasta <ANTO.L> and Lonmin <LMI.L> rose 1.4 percent and
2.3 percent, respectively, while Rio Tinto <RIO.L>, Randgold
Resources <RRS.L> and Fresnillo <FRES.L> fell 0.6 to 0.8
percent.
BHP Billiton, the world's largest miner, gave a cautiously
optimistic outlook for commodities demand on Wednesday after
posting a 51 percent dive in second-half profit, its first
profit fall in seven years. Its shares rose 1 percent.
[]
Construction and engineering group Balfour Beatty <BALF.L>
was the top blue chip performer, up 6.6 percent after it said
underlying first-half pretax profit rose by 14 percent, boosted
by growth at its U.S. operations. []
Defensive attractions boosted tobacco stocks, with British
American Tobacco <BATS.L> gaining 0.1 percent and Imperial
Tobacco <IMT.L> adding 1.6 percent.
Ex-dividends factors knocked 8.65 points off the FTSE 100,
with BP <BP.L>, BT Group <BT.L>, Pennon <PNN.L>, RSA Insurance
<RSA.L>, Schroders <SDR.L>, Standard Chartered <STAN.L> and
Standard Life <SL.L> also losing their payout attractions.
The focus will now switch to the United States and the
outcome of the latest rate-setting Federal Reserve Open Market
Committee meeting.
The Fed is expected to hold rates near zero when it makes
the announcement at 1815 GMT and let a $300 billion programme to
buy Treasury securities expire on schedule in September as
economic gloom lifts.
"Having come through the second quarter season relatively
unscathed both sides of the pond, I think the concentration is
now going back to economic data just for some sort of
confirmation that perhaps we've seen the worst," said Hargreaves
Lansdown's Hunter.
(Editing by Hans Peters)
