* Defensives in demand
* Oils higher; BP rallies after recent sell-off
* Banks softer as risk appetite retreats
By Tricia Wright
LONDON, July 8 (Reuters) - London's top share index was flat
at midday on Wednesday, as strength in defensive stocks and oils
was offset by falls in bank stocks.
The FTSE 100 <> was down 1.40 points, or 0.03 percent,
at 4,185.60 at 1046 GMT, after touching its lowest level since
late April earlier in the session. It closed 0.2 percent lower
at 4,187.0 on Tuesday.
The index has gained 21 percent since hitting a six-year low
in March, but is still down 5.6 percent for the year.
"There's continuing uncertainty about the outlook for the
economy and that continues to weigh on sentiment, even though
the economic indicators generally are getting a little bit
better," said Darren Winder, head of macro and strategy research
at Cazenove.
Good gains were seen from defensive pharmaceuticals,
telecoms and tobacco issues as investors bought into assets
perceived as safe bets in an extremely risk averse environment.
GlaxoSmithKline <GSK.L> added 1.8 percent, while index
heavyweight Vodafone <VOD.L> climbed 1 percent, and British
American Tobacco <BATS.L> gained 0.4 percent.
Oil and gas producers were also firmer. BP <BP.L> enjoyed a
bounce after a recent sell off, up 1.1 percent, with BG <BG.L>
and Royal Dutch Shell <RDSa.L> both up 0.4 percent.
Tullow Oil <TLW.L>, meanwhile, shed 0.6 percent after saying
it expected first-half revenue to fall 23 percent on lower oil
prices. []
Some miners rallied, against a backdrop of mixed metal
prices and after a broadly positive note from Citigroup, which
raised Rio Tinto's <RIO.L> target price and its recommendation
on Antofagasta <ANTO.L> to "hold" from "sell".
Rio Tinto and BHP Billiton <BLT.L> were also boosted by a
note from Investec which raised them to "buy" from "hold".
Rio Tinto gained 0.5 percent, Antofagasta added 0.9 percent
and BHP Billiton rose 1 percent.
Banks, however, were under pressure, with investors' risk
appetite diminished. Barclays <BARC.L> shed 2.3 percent, HSBC
<HSBA.L> was off 0.3 percent, Lloyds Banking Group <LLOY.L> fell
0.7 percent and Royal Bank of Scotland <RBS.L> dropped 0.8
percent.
ECONOMIC DATA, OUTLOOK
Highlighting the headwinds buffeting the economy, the
Halifax house price index showed prices fell 0.5 percent on the
month in June to be 15 percent lower in the three months to June
compared to a year ago.
Meanwhile, British consumer confidence rose in June as
people became more optimistic about the future of the economy, a
Nationwide survey showed.
The Nationwide consumer confidence index rose to 58 in June
from an upwardly revised 54 in May, almost reaching the 59
reading a year earlier. The original reading for May was 53.
[]
U.S. May consumer credit numbers should be a focus later in
the session, and the U.S. second-quarter corporate earnings
season kicks off as well on Wednesday, with Alcoa <AA.N> and
Pepsi Bottling Group <PDG.N> among the first.
Leaders from the Group of Eight major industrial nations are
expected to warn against complacency over economic recovery when
they begin an annual summit in L'Aquila, Italy on Wednesday.
[]
"I think there is considerable upside in equities on a 6-12
month view, but for that we are going to need profits in the
cyclicals to recover, and we need to see valuations in the
defensive areas of the market expand. And at the moment that's
not materialising," Cazenove's Winder said.
(Editing by Dan Lalor)
