* Banks slide as RBS losses spook sector
* Barclays gains, but bailout plan overshadows
* Energy stocks, miners up on firmer commodity prices
By Simon Falush
LONDON, Jan 19 (Reuters) - Britain's top share index gained
1.6 percent by midday Monday as recovering commodity prices
lifted energy and mining stocks, but a second bank bailout was
overshadowed by a huge loss from Royal Bank of Scotland, denting
financial stocks.
By 1140 GMT the FTSE 100 <> was up 64.92 points at
4,211.98 having shed 6.8 percent last week.
Royal Bank of Scotland <RBS.L> tumbled 45 percent after it
announced a loss of over 20 billion pounds ($30 billion) last
year, the biggest loss in British corporate history.
[]
Its shares plummeted to 18.9 pence having traded at above
250 pence in September and above 600 pence in 2007.
"The banking system is in a state of disarray and the
deterioration in RBS has been pretty severe," said Tim
Whitehead, stockbroker at Redmayne-Bentley in Leeds. "It's a
drag on the sector and the wider market."
Britain threw its troubled banks another multi-billion
pound lifeline by allowing them to insure against steep losses
and guaranteeing their debt to stop the credit crunch pushing
the economy deeper into recession. []
But analysts were sceptical about whether it would
effectively address underlying problems facing the sector.
"We would regard the indicated latest plans as positive at
the margin, but not changing the key issue of the unknown and
potentially unlimited losses of the banking system and therefore
whether it will ultimately require further capital injections,"
Nomura analysts said in a client note.
Lloyds Banking Group <LLOY.L> slid 16.7 percent on its first
day as a combined entity after Lloyds TSB took over HBOS.
Barclays <BARC.L> bucked the trend among banks gaining 4.4
percent, clawing back some of a 25 percent slump on Friday,
after the bank said it expected to report full-year pretax
profit well ahead of consensus estimates.
Standard Chartered <STAN.L> added 2.7 percent, while HSBC
<HSBA.L> slid 1.6 percent.
The UK banking index <.FTNMX8350> is down 25 percent on the
month, having slid almost 57 percent last year.
ENERGY GAINS
Heavyweight energy stocks added most points to the index as
the price of crude steadied around $36 a barrel.
BG Group <BG.L>, BP <BP.L> and Royal Dutch Shell <RDSa.L>
gained between 2.5 percent and 3.5 percent.
Miners were also in positive territory as metals prices
gained. Xstrata <XTA.L>, and Vedanta Resources <VED.L> and Rio
Tinto <RIO.L> were up 3.6 percent to 6 percent.
Asking prices for houses in England and Wales fell 7.3
percent on a year ago in January, property website Rightmove
said on Monday, the sharpest drop since its house price series
began in August 2002.
The survey, which is not adjusted to take seasonal factors
into account, showed average asking prices fell 1.9 percent
between December and January to 213,570 pounds, down nearly 12
percent from their peak last May and the lowest level since June
2006. []
Analysts said the dire economic news was limiting any
recovery in the market.
"Fundamentally, equities are cheap, there is no question
about that," said Darren Winder, head of macro and strategy
research at Cazenove.
"But economic conditions are so weak that sentiment is
understandably fragile, so we are still bumping along the
bottom, but over time we will see the market trend upwards."
Pearson <PSON.L> was among the strongest gainers, up 5.1
percent after the publishing group up said it will report
headline earnings growth ahead of analysts expectations thanks
to its high proportion of subscription customers and a strong
dollar.
Tate & Lyle <TATE.L> fell 1.5 percent after Credit Suisse
cut the sugar producer to underperform from neutral and reduced
its price target and estimates.
