Commodities, Vodafone lift FTSE 100; banks fall

                                
 *FTSE 100 up 1.06 percent
                                
 *Oil shares track higher crude prices
                                
 *Vodafone up on MySpace music deal
                                
 *Rio Tinto climbs on report of Mittal interest
                                
 
                                
 By Dominic Lau
                                
 LONDON, June 30 (Reuters) - Britain's leading share index
rose 1.06 percent by midday on Monday as oil stocks tracked
record high crude prices and heavyweight Vodafone <VOD.L> gained
on a music deal with MySpace, though banks fell.
                                
 By 1105 GMT, the FTSE 100 <.FTSE> was up 58 points at
5,587.9, following a 1.6-percent loss last week that was driven
by concerns over more losses at British banks.
                                
 Since May 19, the UK benchmark index has given up much of
its 17.7 percent rally from this year's lowest closing level.
                                
 The blue chip index has fallen 13.6 percent in the first
half of the year on lingering concerns over the fallout of a
global credit crisis and the impact of higher commodity prices.
That compared with a gain of 6.2 percent the same period last
year.
                                
 "The simple yield gap model, which gave a strong "buy"
signal in March, is still in neutral territory, despite markets
making new lows. The reason for this is a move up in bond yields
on the back of more hawkish central banks," said Mislav Matejka,
European equity strategist at JPMorgan in a note.
                                
 "However, equities are not expensive by any means using this
model. To get another "buy" signal, the required move down in
bond yields, or in equities, is quite small, 10 basis points, or
3 percent respectively."
                                
 Record crude prices <CLc1> lifted heavyweight oil shares. BP
<BP.L> climbed 2.1 percent, Royal Dutch Shell <RDSa.L> gained
1.3 percent and gas producer BG Group <BG.L> added 2.2 percent.
                                
 Miners also rose on higher metal prices and after the
Financial Times said Lakshmi Mittal was looking at entering the
takeover battle for Rio Tinto <RIO.L>, which is a target for BHP
Billiton <BLT.L>. [ID:nL29134695]
                                
 Rio Tinto was up 2.3 percent, while BHP added 1.6 percent.
Within the sector, Vedanta Resources <VED.L>, Anglo American
<AAL.L> and Xstrata <XTA.L> put on 0.8 to 2.1 percent.
                                
 Vodafone climbed 3.1 percent after the mobile operator
announced a deal with News Corp's <NWSa.N> MySpace under which
footage from Vodafone-sponsored music events will be made
available to users of the social networking Web site.
Banks were the biggest drag on the index, with Barclays
<BARC.L>, Royal Bank of Scotland <RBS.L>, HBOS <HBOS.L>, HSBC
<HSBA.L> and Lloyds TSB <LLOY.L> down 0.3 to 2.6 percent.
                                
 Approval for new home loans in Britain plummeted in May to a
record low, official data showed, in a sign that house prices
will fall sharply in the coming months. [ID:nBOE001453]
                                
 Another survey by property research company Hometrack showed
house prices in England and Wales fell for a ninth month running
in June, leaving them 3.2 percent lower than a year ago.
[ID:nL27581713]
                                
 
                                
 SWITCH CHANNEL
                                
 ITV <ITV.L> dropped 5.7 percent to top the FTSE 100 losers
after Deutsche Bank cut its price target on Britain's biggest
free-to-air commercial broadcaster.
                                
 "We may not yet have had a full test of that mid-March low
... It certainly looks more oversold today than a little while.
The fact that it is technically oversold is helping to provide a
little bit of support," said Mike Lenhoff, chief strategist at
Brewin Dolphin.
                                
 Lenhoff said the market should have priced in a European
Central Bank rate hike on Thursday but investors would be keen
to watch out for further signals from the central bank. The Bank
of England is also due to announce its rate verdict on Thursday.
Marks & Spencer <MKS.L>, Britain's largest clothing
retailer, shed 2.8 percent.
                                
 Consumer confidence in Britain slumped this month to its
lowest level since March 1990, when the economy was teetering on
the edge of a protracted recession, a survey by GfK NOP showed.
[ID:nL27277892]
                                
 Housebuilder Taylor Wimpey <TW.L> lost 4.8 percent after the
FTSE 250 <.FTMC> listed company said it was in talks with
shareholders and other institutions about raising additional
financing, which would most likely be via a placing and open
offer. [ID:nL30138473]
                                
 Peers Persimmon <PSN.L>, Bovis Homes <BVS.L>, Redrow
<RDW.L>, Barratt Developments <BDEV.L> and Bellway <BWY.L>
gained between 0.6 and 6.3 percent.
 (Additional reporting by Michael Taylor and Atul Prakash;
Editing by David Cowell)