FTSE flat as commods lead

By Michael Taylor

LONDON (Reuters) - The FTSE traded flat by mid-session on Wednesday as rising energy prices gave commodity shares a bounce, but hawkish Bank of England minutes weighed on banks.

At 12:32 p.m. the FTSE 100 .FTSE had edged up 3.4 points, or 0.1 percent to 6,195 in volatile trading and after shedding 2.9 percent in the previous session in its biggest one-day fall in two months.

The Bank minutes showed that policymakers voted 8-1 to hold interest rates at 5 percent this month, as most members were worried that lowering rates from 5 percent would make it harder to control inflation expectations, given a shock spike in consumer price inflation to 3 percent in April.

On the upside, oil shares rebounded and accounted for a massive 49 positive index points, aided by U.S. crude prices which hit $130 a barrel.

BP (BP.L) advanced 3.1 percent, Royal Dutch Shell (RDSa.L) added 4.4 percent, BG Group (BG.L) climbed 4.3 percent and Cairn Energy (CNE.L) tacked on 4.5 percent.

"The market had a huge correction yesterday," said David Battersby, stockbroker at Redmayne-Bentley. "I'm still a huge bull of the commodity story."

"The oil price rising as it is, is a huge benefit ... because the more it becomes costly, the more cost-efficient it is to look at alternatives."

Inflationary concerns helped boost precious metal prices, as miners rose after profit-taking hit the sector on Tuesday. Kazakhmys (KAZ.L), BHP Billiton (BLT.L) and Rio Tinto (RIO.L) added 0.2-2.2 percent.