* Miners rise with metal prices
* Defensive issues weak led by drugs, tobaccos
* Oils fall back with crude price
By Jon Hopkins
LONDON, June 24 (Reuters) - Britain's leading share index
was 0.2 percent higher mid-session on Wednesday as gains from
heavyweight miners and banks offset weakness in defensive
issues, such as drug and tobacco stocks, and in oils.
By 1038 GMT, the FTSE 100 <> index was up 8.07 points
at 4,238.09 after closing 4.03 points lower on Tuesday.
"It's like watching paint dry," said Manus Cranny, head of
sales at MF Global.
"But we think people are mainly shaving positions and there
is still a net appetite to be long of the markets ... they are
not tanking, they are retracing and it's just something of a
reality check."
Strength in heavyweight miners was the main prop for the
market by midday, with metal prices rising as the dollar
weakened, reviving interest in the sector.
Anglo American <AAL.L> was the top FTSE 100 gainer, up 5.9
percent as takeover speculation continued to swirl around the
stock, following the miner's rejection on Monday of a merger of
equals proposed by Xstrata. <XTA.L> []
Takeover interest in Anglo American has revived the prospect
of a sale of heavy building materials group Tarmac, its most
out-of-place division, The Financial Times said.
For a view on Anglo American's options by Reuters columnist
Alexander Smith, double-click on [].
Among the other miners, Kazakmys, <KAZ.L> Eurasian Natural
Resources, <ENRC.L> Vedanta Resources, <VED.L> Rio Tinto
<RIO.L> and Xstrata <XTA.L> gained between 2.8 and 5.3 percent.
Banks also found support after recent falls, as investors
awaited news from the U.S. Federal Reserve later on Wednesday.
Barclays <BARC.L>, Standard Chartered <STAN.L>, Lloyds
Banking Group <LLOY.L>, Royal Bank of Scotland <RBS.L> and HSBC
<HSBA.L> gained between 0.4 and 4.2 percent.
The Fed is widely expected to keep interest rates on hold at
a record low and maintain its planned debt purchases, so the
focus will be on whether the bank tweaks its statements to reign
in the slide in U.S. Treasuries that threatens the economy's
budding recovery. []
Before the Fed decision, which will be announced after
European markets have closed, investors will look to U.S. new
home sales data, to be announced at 1400 GMT, for further
evidence of any recovery.
DEFENSIVES DRAG
After recent rallies by defensive stocks, some profit-taking
emerged for heavyweight drugmakers, tobacco, and household goods
stocks with sector rotation the main market activity.
GlaxoSmithKline <GSK.L> shed 1.3 percent. The drugmaker
announced late on Tuesday that the U.S. Food and Drug
Administration had said it would not approve its experimental
nausea drug Rezonic for cancer or surgical patients.
[]
Peers AstraZenca <AZN.L> and Shire <SHP.L> lost 0.7 and 0.3
percent, respectively.
British American Tobacco <BATS.L> fell 0.4 percent, Imperial
Tobacco <IMT.L> was off 0.2 percent, household product firm
Unilever <ULVR.L> dropped 1.3 percent and mobile telecoms
heavyweight Vodafone <VOD.L> shed 0.7 percent.
Food retailers also suffered, with Tesco <TSCO.L>, Sainsbury
<SBRY.L>, and Wm. Morrison <MRW.L> losing between 1.2 and 1.7
percent.
British retail sales fell in June at the same pace as in
May, though orders placed with suppliers picked up, a survey by
the Confederation of British Industry showed on Wednesday.
The CBI's distributive trades survey sales balance remained
unchanged in June at May's level of -17, in line with analysts'
average forecast. []
Britons' expectations for inflation in the year ahead rose
to 2.0 percent in June from 1.6 percent in May, a survey by
YouGov/Citigroup showed.
Ex-dividend factors accounted for the top two FTSE 100
fallers, with Friends Provident <FP.L> down 4.5 percent and
Experian <EXPN.L> off 2.7 percent.
Weak oil majors were also a drag on blue chip sentiment as
crude <CLc1> fell back below $69. BP, <BP.L> Royal Dutch Shell
<RDSa.L> and BG Group <BG.L> were down between 0.4 and 0.7
percent.
(Editing by Karen Foster)
