By Michael Taylor

LONDON, Oct 12 (Reuters) - The FTSE 100 .FTSE of Britain's leading shares ended at its highest level since mid-July on Friday to reverse earlier losses as Northern Rock NRK.L dipped in and out of negative territory and oil companies lent support.

The main blue-chip index ended 6.2 points higher at 6,730.7, as U.S. markets rose after data showed better-than-expected September retail sales.

Among individual stocks, volatile Northern Rock topped the FTSE 100 gainers, up 5.9 percent after Richard Branson's Virgin Group led a consortium to take over the bank.

The consortium submitted a rescue plan that will rename and rebrand Northern Rock to Virgin Money with a substantial cash sum injected into the company for new equity to be issued at a discount to the current share price.

Among leading sectors, oil shares buoyed as U.S. crude CLc1 held at around $83 a barrel on supply concerns over mounting tensions between Turkey and northern Iraq. M&A activity in the sector also provided a boost.

BG Group (BG.L: Quote, Profile, Research) gained 1.5 percent as traders cited talk that Royal Dutch Shell (RDSa.L: Quote, Profile, Research) and Gazprom (GAZP.MM: Quote, Profile, Research) may bid for the British gas producer.

The rise followed a report in the Financial Times that Shell or Petrobras (PETR4.SA: Quote, Profile, Research) may be looking at the firm. Shell, which gained 0.5 percent, was not immediately available for comment. BG Group declined to comment.

BP (BP.L: Quote, Profile, Research) rose 4.3 percent, adding to a 2.3-percent gain in the pervious session after the oil major outlined a plan to address industry-lagging profitability by slashing management layers, adopting consistent procedures for developing oil and gas fields and reducing "unacceptably high" costs, traders said.