* FTSE 100 rises 1 pct
* Financials rebound; Aon makes offer for Benfield
* Energy stocks dip as oil prices retreat from highs
By Simon Falush
LONDON, Aug 22 (Reuters) - Britain's top share index rose 1
by midday on Friday as miners benefited from firmer commodity
prices, while financials rebounded after recent losses and were
boosted by merger and acquisition activity in the sector.
By 1009 GMT, the FTSE 100 <> was up 51.1 points at
5,3421.2, after ticking down 1.6 points on Thursday. The UK
benchmark is down 16 percent for the year.
Banks were the biggest gainers, rebounding after recent
losses as Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>,
Lloyds TSB <LLOY.L>, HBOS <HBOS.L>, HSBC <HSBA.L> and Standard
Chartered <STAN.L> gained between 0.5 and 4.3 percent.
The sector was also helped by the announcement from Benfield
<BFD.L> and Aon Corp <AOC.N>, one of the world's largest
insurance brokers, that the U.S. firm had made a recommended
cash offer for the UK-listed broker. []
Mid-cap Benfield leapt nearly 30 percent.
Traders said the rise in financial stocks was also driven by
investors covering short positions ahead of the long weekend
holiday.
Bradford & Bingley <BB.L> advanced 1 percent after the
mid-cap mortgage lender said underwriters and other banks had
entered a lock-up agreement under which they have agreed not to
dispose of the 426.7 million new shares for 20 days.
Data showed the UK economy unexpectedly ground to a halt in
the second quarter pushing trade-weighted sterling to its lowest
in 11-1/2 years <=GBP> and knocking a few points off the FTSE
100.
However, the FTSE soon recovered as investors took the poor
data as a sign that the Bank of England would likely deliver
interest rate cuts soon.
"The data was weak, but not as weak as some had expected,
and it boosts expectations that the Bank of England is going to
cut interest rates when headline inflation comes under control,"
said Jeremy Batstone-Carr, head of private client research at
Charles Stanley.
Investors will look for further clues on the health of the
global economy when the U.S. Federal Reserve's Ben Bernanke
speaks on the credit market and the financial sector at 1400
GMT.
Miners were up broadly as gold prices <XAU=> held near a
one-week high. BHP Billiton <BLT.L> and Rio Tinto <RIO.L>
shrugged off early losses on news that there may be regulatory
problems with a planned $128 billion deal.
Eurasian Natural Resources <ENRC.L>, Anglo American <AAL.L>,
Antofagasta <ANTO.L>, Xstrata <XTA.L>, Ferrexpo <FXPO.L> were
up between 0.8 and 2.7 percent.
Energy stocks pared early gains to move into the red after
crude prices <CLc1> retreated from sharp gains the previous
session.
BP <BP.L>, BG Group <BG.L>, Tullow Oil <TLW.L> and Cairn
Energy <CNE.L> fell between 0.8 and 1.8 percent while Royal
Dutch Shell <RDSa.L> bucked the trend, gaining 0.3 percent.
Russia-focused Imperial Energy <IEC.L> also shrugged off the
slide in oil prices to rise 1.8 percent after the Financial
Times said the mid-cap firm has made good progress in talks with
India's Oil and Natural Gas Corp <ONGC.BO> and is close to
agreeing a takeover deal valuing Imperial at about $2.8 billion.
WPP <WPP.L> gained 0.75 percent, underperforming the index
despite the advertising group beating market expectations with
its like-for-like sales growth for the first half and raising
its interim dividend by 20 percent. []
Among those reporting results, mid-cap Rentokil Initial
<RTO.L> shed 5.1 percent after the services group posted a 55.3
percent fall in first-half pretax profit and said the current
rate of losses would continue for the remainder of the year.
Arriva <ARI.L> gained 4.5 percent after the bus and train
operator reported a 40 percent rise in pretax profit, reflecting
rising demand for its bus operations and the first contribution
from its UK CrossCountry rail franchise. []
(Reporting by Simon Falush; editing by Rory Channing)
