FTSE rises on oils, banks but miners head south

Wed May 7, 2008 11:52am BST

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By Dominic Lau

LONDON, May 7 (Reuters) - Britain's FTSE 100 .FTSE index rose by midday on Wednesday as near record high crude prices lifted oil shares and banks reversed earlier losses, offsetting weakness in miners.

By 1032 GMT, the UK's blue-chip index was up 40 points, or 0.6 percent at 6,255.2 after ending the previous session flat. The FTSE 100 has risen 15 percent since March 17 when the index hit its year's lowest closing level, but it is still down 3 percent for the year.

"The market is being supported by good news from America ... Following all these doom and gloom stories and banks reporting terrible losses, we have got through the majority of the reporting season and everyone breathes a sigh of relief," said Angus Campbell, head of sales at Capital Spreads.

"The flipside of that is of course these oil prices are continuing to rise... Eventually consumers are going to be really prevented from spending any disposable income. That will eventually eat into company's margins."

Strong crude prices CLc1 helped pump heavyweight oil and gas shares higher, with BP (BP.L: Quote, Profile, Research) and Royal Dutch Shell (RDSa.L: Quote, Profile, Research) up between 1.1 and 1.9 percent.

Cairn Energy (CNE.L: Quote, Profile, Research) advanced 3.4 percent after index provider MSCI Barra added the stock to its MSCI World Index .MIWD00000PUS.

Miners, however, tracked metal prices lower, with BHP Billiton (BLT.L: Quote, Profile, Research), Rio Tinto (RIO.L: Quote, Profile, Research), Kazakhmys (KAZ.L: Quote, Profile, Research), Lonmin (LMI.L: Quote, Profile, Research), Anglo American (AAL.L: Quote, Profile, Research), Xstrata (XTA.L: Quote, Profile, Research), Vedanta Resources (VED.L: Quote, Profile, Research) and Antofagasta (ANTO.L: Quote, Profile, Research) losing 0.2 to 3.3 percent. Antofagasta also traded without the rights to dividend.