* FTSE turns positive, up 1 percent
* Miners track firmer metal prices, oil shares turn positive
* HBOS slips after announcing rights issue results
By Rebekah Curtis
LONDON, July 21 (Reuters) - The British blue-chip index rose
1 percent by mid-session on Monday after early losses, as oils
and mining shares gained with higher commodities prices and
banks jumped after results from Bank of America.
By 1121 GMT, the FTSE 100 <> was up 55.4 points at
5,431.8, after closing up 1.7 percent on Friday, marking its
first weekly increase in nine weeks and the end of the longest
losing stretch since late May 2002.
Oil shares forged higher, tracking gains of more than 1
percent in crude prices that headed back above $130 a barrel
after their biggest one-week slide on record, supported by
inconclusive talks at the weekend between Iran and world powers
over Tehran's nuclear programme.
BP <BP.L> added 0.5 percent, Royal Dutch Shell <RDSa.L> rose
0.8 percent and BG Group <BG.L> put on 1.2 percent.
"It's always a double-edged sword," said Richard Hunter,
head of UK equities at brokerage Hargreaves Lansdown, referring
to the rise in oil prices. "It provides support for the oil
shares but by the same token it's negative for the economy."
He said investors should expect further volatility in coming
sessions in a market still unnerved by a rolling credit crisis.
"Jitters abound at the moment ... It's still a market that's in
desperate need for a positive catalyst."
But banking stocks extended gains after Bank of America
<BAC.N> announced quarterly results that added to hopes the
banking sector was stabilising.
Royal Bank of Scotland <RBS.L> added 5.3 percent and
Standard Chartered <STAN.L> rose 2.8 percent. HSBC <HSBA.L>
advanced 3.8 percent, also after the Sunday Telegraph said the
global banking group had held talks with China's sovereign
wealth fund over a potential investment in HSBC. []
But HBOS <HBOS.L> dropped 1.9 percent after shareholders
subscribed to buy just 8.3 percent of shares in its $8 billion
rights issue, leaving underwriters to try to sell shares worth
almost 3.8 billion pounds of shares. []
CAUTIOUS APPROACH
But investors remained cautious because of a poor economic
outlook.
Bank of England policymaker David Blanchflower was quoted as
saying in a newspaper interview that the British economy was
heading into recession and interest rates should fall to "well
below" their current 5 percent. ID:nN20348513]
A survey by property website Rightmove showed asking prices
for homes in England and Wales fell two percent year-on-year in
July, the first annual fall since the series began six years
ago. []
Miners gained, helped by a weaker dollar and ahead of
expected strong results in coming weeks. Kazakhmys <KAZ.L> rose
4.1 percent, BHP Billiton <BLT.L> added 4 percent and Anglo
American <AAL.L> gained 3.7 percent.
Shares in heavyweight Vodafone <VOD.L> fell 2 percent after
gaining more than 5 percent in the previous three sessions and
ahead of the company's trading update on Tuesday.
Investors will shift their attention to results from Apple
<AAPL.O> and Merck & Co <MRK.N> later in the day for further
market direction.
(Additional reporting by Dominic Lau; Editing by Quentin Bryar)
