By Patrizia Kokot
LONDON, May 29 (Reuters) - Britain's benchmark FTSE 100
index advanced further in midday trade on Thursday as miners and
oil stocks recovered after Wednesday's decline.
By 1039 GMT, the FTSE 100 <> was up 29.2 points, or
0.49 percent, at 6,097.9, but still some 4 percent below a
four-month peak reached on May 19.
Oil heavyweights BP <BP.L> and Royal Dutch Shell <RDSa.L>
led the advance, up 2 percent and 1.7 percent respectively as
oil prices <CLc1> remained above $130 a barrel, although
analysts cautioned that a more protracted decline may be
imminent as demand falls.
"If it has peaked, it is going back to $100 a barrel
really," Mike Lenhoff, chief strategist and head of research at
Brewin Dolphin, said.
He said that a sharp pullback in the price of oil would
weigh heavily on oil stocks, which make up some 20 percent of
the FTSE, but benefit the remaining 80 percent.
"There would be an immediate benefit for some stocks, such
as transport and leisure, and indirectly it would benefit the
others because the price of oil is such an important cost. It
would lower inflation expectations and people could take a
different view on interest rates and it would alleviate pressure
on profit margins," Lenhoff said.
Separately, BG Group <BG.L> rose 1.2 percent on the back of
an Australian news report which said Origin Energy <ORG.AX> was
poised to accept an improved bid from the UK gas producer.
Miners were also in favour after Rio Tinto <RIO.L> predicted
seven years of near-double-digit percentage annual production
growth as it argued its case for rejecting a $178 billion
takeover bid from rival BHP Billiton <BLT.L> as too low.
Rio Tinto added 3.1 percent, while BHP Billiton was up 1.7
percent. Peers Antofagasta <ANTO.L> and Anglo American <AAL.L>
were up 1.7 and 1.5 percent respectively.
MAN Group <EMG.L>, the world's biggest listed hedge fund,
added 2 percent after posting a 60 percent improvement in annual
profit. The group also said funds under management are growing
strongly despite uncertain financial markets.
Carpetright <CATVU.L> was up 1.2 percent following a report
in The Times that Bill Gates acquired 3 percent in Britain's
largest carpet seller.
Banks were among the day's casualties. Royal Bank of
Scotland <RBS.L> retreated 0.8 percent as the Daily Mail
reported that the bank extended Wednesday's deadline for the 7
billion pound auction of its Direct Line and Churchill insurance
businesses at the request of the suitors.
Peer HBOS <HBOS.L> shed 2 percent as Nationwide building
society reported a far worse than expected 2.5 percent
month-on-month decline in house prices for May.
Barclays <BARC.L>, which owns mortgage lender Woolwich, fell
1.9 percent, while property stocks also came under pressure,
with Persimmon <PSN.L> down 3.3 percent, Taylor Wimpey <TW.L>,
down 5.6 percent and British Land <BLND.L> down 1.4 percent.
Power supplier Scottish & Southern Energy <SSE.L> eased 0.6
percent after posting full-year profits in line with market
expectations, but said that it has no intention of raising
prices.
Among second tier groups, Blacks Leisure <BSLA.L> fell 4.3
percent after the outdoor clothing retailer posted pretax
profits below expectations and said that "radical change" is
needed to restore performance to previous levels.
Investors will cast an eye over a preliminary reading of
first-quarter U.S. GDP data at 1230 GMT. Weekly jobless claims
will also be released.
(Editing by Paul Bolding)
