* Heavyweight oil shares in demand as crude prices stay high
* Banks fall on funding fears; UBS leads Europe banks lower
* Underwriters place 730 mln pounds worth of RBS stock
By Atul Prakash
LONDON, June 9 (Reuters) - Britain's blue-chip index inched
higher by midday on Monday on stronger energy and mining stocks,
but banks stayed weak as funding concerns lingered.
By 1038 GMT, the commodity-heavy FTSE 100 <> was up 6.1
points, or 0.1 percent, at 5,912.9, after losing 2.4 percent
last week.
Data showing UK factory gate inflation for May hit a record,
which could prevent the Bank of England from cutting interest
rates, raised concerns about consumer spending and brought down
retail stocks.
"Pressure is coming through the sectors vulnerable to
consumer slowdown, but the London market is showing tremendous
performance coming through from the oil and commodities sector,
said Henk Potts, equity strategist at Barclays Stockbrokers.
"The banking sector could bounce back. We are also very
comfortable about the outlook in terms of the mining sector," he
said, adding that telecoms could also perform well.
Banks were broadly lower.
Royal Bank of Scotland <RBS.L> said 95.1 percent of
shareholders had subscribed for its record 12 billion pound
($23.5 billion) rights issue, leaving about 730 million pounds
of shares to be placed by underwriters. RBS was down 0.6
percent.
Barclays <BARC.L> fell 1.9 percent after the Daily Telegraph
reported on Sunday that the British bank was in advanced talks
with overseas government-backed funds to secure a capital
injection of more than 3 billion pounds.
Also weighing on sentiment towards the sector was a media
report that Swiss bank UBS <BSN.VX> could post further losses in
the second quarter. []. UBS was down 3.7 percent,
with its rights issue drawing to a close.
"We have got a hangover from Friday with the U.S.
unemployment rate," said Martin Slaney, head of derivatives at
GFT Global Markets, referring to a surge in U.S. unemployment to
its highest in more than 3-1/2 years in May.
In the United States, the Wall Street Journal said Lehman
Brothers <LEH.N> was close to raising more than $5 billion and
was set to report a loss of more than $2 billion in the second
quarter.[]
OILS, MINERS SHINE
Oil shares lent support as crude <CLc1> stayed just shy of
$137, though it was off a record of $139 a barrel on Friday.
BP <BP.L> advanced 2.2 percent, Royal Dutch Shell <RDSa.L>
gained 2.1 percent, gas producer BG Group <BG.L> added 1.4
percent and Cairn Energy <CNE.L> put on 1.4 percent.
But British Airways <BAY.L> dropped 3 percent, bus and train
operator FirstGroup <FGP.L> lost 1.7 percent and cruise operator
Carnival <CCL.L> slipped 2.3 percent.
Among miners, BHP Billiton <BLT.L>, Anglo American <AAL.L>,
Lonmin <LMI.L> and Kazakhmys <KAZ.L> all gained. Vedanta
Resources <VED.L> rose 2.7 percent after Standard and Poor's
revised the miner's resources outlook to positive from negative.
Retailers felt the pinch of low consumer spending. The
British Retail Consortium's consumer confidence index showed
that 65 percent of consumers believed that the country was in
recession and 34 percent predicted a global recession in the
next 12 months.
Marks & Spencer <MKS.L> shed 2.4 percent, Kingfisher <KGF.L>
lost 1.6 percent and Home Retail <HOME.L> dropped 0.2 percent.
But Informa <INF.L> jumped 11 percent and United Business
Media <UBM.L> climbed 2.2 percent after they confirmed that they
were in early stages of talks about an all-share merger to
create a 3 billion-pound-plus media group. []
(Editing by Erica Billingham)
