(Updates to explain RBS share move)
By Sitaraman Shankar
LONDON, May 19 (Reuters) - European stocks ticked up by
midday on Monday as buoyant commodity stocks made up for losses
in financials, while bearish brokerage comment punctured British
Airways <BAY.L>.
At 1104 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.13 percent at 1,367.04 points,
extending a three-day winning run. The index is up 2 percent so
far this month, adding to a 6 percent rise in the index in
April.
Energy stocks featured prominently among the top weighted
gainers, with Total <TOTF.PA> rising 0.9 percent, BG Group
<BG.L> 2.1 percent and BP <BP.L> 0.5 percent, as crude traded at
$126 a barrel.
Four miners were the top winners among British stocks --
Kazakhmys <KAZ.L>, Vedanta <VED.L>, Anglo American <AAL.L> and
Lonmin <LMI.L> gained between 3.3 and 5.7 percent.
"I'm a big believer in the long-term commodity bull run, but
we expect a correction at some point as they are very much
overbought," Philippe Gijsels, strategist at Fortis in Brussels,
said.
"We are neutral but not underweight on the sector as it
would be really dangerous to stand in front of a train that's
running this fast," he added.
RBS fell 4.3 percent to lead banks lower, with investors
citing a technical sell-off related to its rights issues and
gloom in the banking sector. Goldman cut its price target on the
stock to reflect it going ex-rights.
Other banks were also weaker, with Alliance & Leicester
<ALLL.L> falling 2.7 percent, HBOS 2.8 percent and Societe
Generale <SOGN.PA> down 1.2 percent.
British mid-cap Bradford & Bingley <BB.L> slid nearly 9
percent on worries over its outlook and a 300 million pound cash
call, with some analysts already valuing the firm as if it was
no longer writing new business.
Banking stocks have been hit over the past year by fears
over the impact of a meltdown in the risky U.S. subprime
mortgage market that has forced many banks to unveil massive
asset writedowns and emergency capital increases.
The DJ Stoxx banking index <.SX7P>, one of the worst
performing sectors in Europe so far this year, has lost 15
percent year to date.
German online mortgage financier Interhyp <IYPGn.DE> surged
37 percent after a unit of Dutch financial services group ING
<ING.AS> offered 416 million euros for it.
British Airways <BAY.L> fell 5.3 percent after downgrades to
"sell" from ABN AMRO and Deutsche Bank.
BEAR MARKET RALLY
The FTSEurofirst has gained 14 percent since mid-March, when
the Federal Reserve helped bail out stricken U.S. bank Bear
Stearns <BSC.N>, but is still down 16 percent from a 6-1/2 year
peak hit last July.
While a credit market crisis sparked by the collapse in U.S.
subprime mortgages has caused a stock bull run to come to a
screeching halt, things have looked up for equities in the past
couple of months due to U.S. rate cuts and reasonable results
from Europe's biggest companies.
But analysts categorise the recovery as a bear-market rally
that is sensitive to any bit of negative data.
"Bear market rallies since 1973 last for an average of 35
trading sessions and add 11-12 percent to markets," said
Gijsels, pointing out the S&P 500 <.SPX> was around this level
now.
"There's a danger that economic figures will disappoint over
the next couple of quarters, while corporate figures will also
deteriorate," he said.
Among other major movers, German truckmaker MAN AG <MANG.DE>
rose 3.5 percent after Goldman Sachs raised its price target on
the stock.
Fertiliser maker K+S <SDFG.DE>, which has outperformed the
broader market so much in recent months on the back of higher
potash prices that it is now a strong candidate to join
Frankfurt's blue-chip DAX index <>, gained 3.4 percent
after positive analyst notes from two banks.
Around Europe, Germany's DAX index <> was up 0.4
percent, UK's FTSE 100 index <> up 0.2 percent and France's
CAC 40 <> up 0.3 percent.
(Editing by Sue Thomas)
