* Banks push up index after Barclays unveils share issue
* Firm crude boosts oils; miners track metal prices lower
* FTSE 100 rises 0.4 pct ahead of Fed
By Rebekah Curtis
LONDON, June 25 (Reuters) - The British blue-chip index rose
by midday on Wednesday, with Barclays <BARC.L> leading banking
stocks higher after unveiling a 4.5 billion pound share issue,
while firm crude prices helped oil shares.
By 1121 GMT the FTSE 100 <> was up 23.3 points, or 0.4
percent, at 5,657.2, bouncing into the black after falling 0.6
in the previous session.
But investors remained cautious ahead of an interest rate
decision by the U.S. Federal Reserve late on Wednesday. The Fed
is widely expected to keep borrowing costs unchanged at 2
percent when it announces its June rate verdict at 1815 GMT.
"It's not so much the decision that has been awaited, but
more important would be the tone of the accompanying words, and
those words would be scrutinised," said Richard Hunter, head of
UK equities at Hargreaves Lansdown.
"With that in mind, there is an element of the UK market
treading water. In the short term, we are bound to see much more
volatility. There are going to be some difficulties coming along
and more cautious investors are waiting on the sidelines with
their cash potentially to buy into weakness on specific stocks."
Analysts said the market will scour the Fed's statement to
see whether the central bank will signal more concern about
inflation or downside risks to the U.S. economy.
Banks topped the index, with Barclays <BARC.L> jumping more
than 6 percent after announcing the raising of new funds through
the issue of 1,576 million new shares. By 1124 GMT, almost 85
million shares had changed hands, more than the 30-day full-day
average of 75.7 million. []
"It's a fairly chunky amount ... They'll find plenty of
willing buyers," Peter Dixon, an economist at Commerzbank, said.
"But those who delay their efforts to raise capital in this
way, especially if they haven't got such a big name, may well be
struggling," he said.
Other banks also gained, with HBOS <HBOS.L> rising 5.5
percent, Royal Bank of Scotland <RBS.L> adding 4.5 percent and
Standard Chartered <STAN.L> up 3.8 percent.
The sector has been the worst hit by a credit market crisis
stemming from the collapse of risky U.S. mortgages. Banks have
been forced to raise fresh capital after taking huge writedowns.
OILS POWER ON
Oil stocks gained as U.S. crude prices traded just shy of
$137 a barrel, approaching a record high of around $140. BP
<BP.L> added 2.1 percent, Royal Dutch Shell <RDSa.L> rose 0.8
percent and BG Group <BG.L> gained nearly 1 percent.
SABMiller <SAB.L> shares added 0.8 percent after sources
familiar with the situation said the brewer has held informal
discussions with Grupo Modelo <GMODELOC.MX> and InBev NV
<INTB.BR> to explore options including a merger of Modelo and
SABMiller. []
Pub owner Punch Taverns Plc <PUB.L> jumped 2.7 percent after
saying it was confident of meeting market full-year profit
forecasts and its balance sheet remained strong. []
But mining stocks suffered and were the biggest loser on the
index, as metal prices softened. BHP Billiton <BLT.L>, Anglo
American <AAL.L>, Vedanta Resources <VED.L>, Xstrata <XTA.L> and
Antofagasta <ANTO.L> all fell between 0.6 and 4.0 percent.
United Utilities <UU.L> lost 4.6 percent, while Compass
Group <CPG.L> and Experian <EXPN.L> also fell, after they all
went ex-dividend.
Old Mutual <OML.L> dropped 3.5 percent after saying
operating profits at its U.S. asset management and life
businesses are running below 2007 levels as a result of tougher
markets.
(Editing by Erica Billingham)
