* FTSE down 0.4 percent
* Miners fall; BofA Merrill Lynch downbeat on sector
* Banks higher; Dubai World restructures debt
By David Brett
LONDON, May 20 (Reuters) - Britain's top shares reversed
early gains to be slightly down by midday on Thursday, as a fall
in miners, weighed by downbeat broker comment, outpaced a rally
in banks on the back of upbeat debt news from Dubai.
By 1041 GMT, the FTSE 100 <> was down 20.34 points, or
0.4 percent, at 5,137.74, having fallen 2.8 percent on Wednesday
when Germany's naked short-selling ban hit sentiment.
"Continued mining weakness is giving us a clear indication
that sentiment is still weak and market confidence remains low,"
Giles Watts, head of equities at City Index said.
Miners, initially higher with metal prices in early trade,
sagged as a downbeat note from BofA Merrill Lynch, which cited
potential China monetary tightening and European sovereign debt
issues hitting demand for metals.
Rio Tinto <RIO.L> and Xstrata <XTA.L>, which were both cut
by the broker to "neutral" from buy" fell 3.6 and 2.7 percent
respectively , while Kazakhmys <KAZ.L> and Vedanta <VED.L>,
which Merrill Lynch double downgraded, fell 3.1 and 3 percent
respectively.
Rio Tinto faces a more difficult task to move ahead on its
Australian projects because of Canberra's planned new tax on
mining profits, a company executive said. [].
National Grid <NG.L> shed 7.3 percent, the top bluechip
faller, after the utility announced a rights issue to raise 3.2
billion pounds and posted an expected 12 percent rise in profit.
[]
Scottish & Southern Energy (SSE) <SSE.L> dropped 4.3 percent
after Exane BNP Paribas downgraded its rating to "neutral" from
"outperform" and revised its market share growth forecasts,
following the energy firm's results on Wednesday.
Brewer SABMiller <SAB.L> fell 5.4 percent after saying it
expected consumer spending to recover only towards the end of
2010, as it reported an adjusted earnings per share of 161.1
U.S. cents, narrowly missing forecasts. []
GlaxoSmithKline <GSK.L> shed 0.7 percent after a German
court ruled a key patent on its lung drug Advair is not valid,
dealing a blow to the top-selling lung drug in Europe's biggest
market. []
U.S. stock index futures for the S&P 500 <SPc1>, Dow Jones
<DJc1> and Nasdaq 100 <NDc1> pointed to a mixed open on Wall
Street on Thursday, ahead of weekly jobless claims due at 1230
GMT.
BANKS CLIMB
Banks, which have been weighed by the sovereign debt problem
in Europe, rebounded from the previous session's falls and as
Dubai World, the state-owned conglomerate, reached a deal in
principle to restructure $23.5 billion debt with the core
lenders.
Barclays <BARC.L>, Royal Bank of Scotland <RBS.L> and Lloyds
Banking Group <LLOY.L> added 0.8 to 3.3 percent.
Energy stocks were higher, with heavyweight BP <BP.L>
gaining as traders cited short covering after a sharp sell-off
on concerns about the cost of cleaning up a massive oil spill in
the Gulf of Mexico.
BP Group <BP.L> gained 2 percent while peer Royal Dutch
Shell <RDSa.L> advanced 1.4 percent.
UK oil explorer Cairn Energy <CNE.L> rose 1 percent after it
said it planned to ramp up production at its oil fields in India
after laying a pipeline which will enable it to sell more oil to
refiners.
British Land <BLND.L> rose 1.3 percent, boosted by a UBS
upgrade to "buy" from "neutral" in the wake of the property
group's full-year results on Tuesday.
There was good news for Britain's retailers, whose sales
rose slightly more than expected in April. []
(Editing by Hans Peters)
