By Dominic Lau
LONDON, June 5 (Reuters) - Britain's leading shares index
edged up on Thursday before a Bank of England interest-rate
decision, as rebounding banks and oil shares outweighed gloomy
miners and Vodafone <VOD.L>.
By 0942 GMT, the FTSE 100 <> was up 11.0 points, or 0.2
percent, at 5,981.1, after shedding 1.5 percent on Wednesday to
hit its lowest closing level since mid-April, its first
sub-6,000 close since then.
"We have seen a little bit of an improvement in one or two
of the banks this morning, for example Royal Bank of Scotland
still trending up as it had in the last couple of days," said
Keith Bowman, analyst at Hargreaves Lansdown. "There are some
broad hopes that its rights issue will be put to bed."
Banks recovered some of their recent losses, with Barclays
<BARC.L>, Royal Bank of Scotland <RBS.L> and HBOS <HBOS.L> up
between 3.1 and 4.9 percent despite the latest weak UK house
price data adding to the sector's woes.
A rating upgrade from Citigroup also helped lift RBS.
British house prices fell by a larger-than-expected 2.4
percent in May, HBOS said, providing further evidence that
housing market downturn is gathering pace. []
The Bank of England is expected to leave its key interest
rate unchanged at 5 percent when it announces its decision at
1100 GMT, as policymakers' worries about higher inflation trump
their fears of a sharp economic slowdown.
"There will certainly be an indication from data that are
coming out that there would be a bias towards cutting rates,"
said Peter Dixon, UK economist at Commerzbank.
"But obviously with CPI inflation at 3 percent and
continuing to rise, it's going to be difficult for the Bank to
do anything in the very near term."
The European Central Bank is also expected to hold rates at
4 percent when it releases its policy decision at 1145 GMT.
Index heavyweight Vodafone <VOD.L> shed 1.8 percent after it
confirmed that its 45 percent-owned, U.S-based Verizon Wireless
is in advanced talks about buying rural mobile service provider
Alltel Corp for $27 billion. []
BOUNCING OILS, WEAK MINERS
Oil shares rebounded as crude prices <CLc1> edged towards
$123 a barrel. BP <BP.L> advanced 0.6 percent and Royal Dutch
Shell <RDSa.L> put on 1.2 percent.
Miners were down as metal prices weakened, with BHP Billiton
<BLT.L>, Rio Tinto <RIO.L>, Anglo American <AAL.L>, Xstrata
<XTA.L>, Antofagasta <ANTO.L> and Lonmin <LMI.L> losing between
1.4 and 3.3 percent.
Platinum specialist Johnson Matthey <JMAT.L> lost 1.1
percent despite beating forecasts with a 16 percent rise in
annual profit.
Wm Morrison Supermarkets <MRW.L>, Britain's fourth biggest
supermarket group, shed 2.7 percent after it posted an
industry-leading 7 percent rise in first-quarter underlying
sales but said the market backdrop was challenging.
Severn Trent <SVT.L> added nearly 2 percent after the water
company said full-year pretax profit rose 15.8 percent, while
the dividend was raised 6.8 percent.
(Additional reporting by Rebekah Curtis; Editing by Quentin
Bryar)
