FTSE falls; oils eclipse gains in banks, Kingfisher

Thu Jul 24, 2008 7:12am EDT

* FTSE 100 down 0.7 pct

* Lower oil prices weigh on energy stocks

* Kingfisher rises on B&Q, margin cheer

* Banks rise, Swiss bank Credit Suisse beats forecasts

By Dominic Lau

LONDON, July 24 (Reuters) - Britain's top share index fell by midday on Thursday as lower oil prices weighed on heavyweight energy stocks, though a trading update boosted retailer Kingfisher (KGF.L: Quote, Profile, Research, Stock Buzz) and Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) results lifted banks.

By 1043 GMT, the FTSE 100 .FTSE was down 36.2 points, or 0.7 percent, at 5,413.7, after rising 1.6 percent on Wednesday.

"It's good that the oil price, which is the big inflationary issue, is receding a little bit. There are all sort of geopolitical things that could flare at any point and send it back to upward track," said Tim Whitehead, head of portfolio services at Redmayne-Bentley.

"It's encouraging short-term. I wouldn't be surprised to see some profit taking and I'll still be cautious on my outlook."

Oil shares were the biggest drag on the index as crude oil CLc1 traded below $125 a barrel, well off its peak of nearly $148 earlier this month.

BP (BP.L: Quote, Profile, Research, Stock Buzz) lost 0.8 percent, Royal Dutch Shell (RDSb.L: Quote, Profile, Research, Stock Buzz) eased 0.9 percent, Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) dropped 4.1 percent, and Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) shed nearly 6 percent.

Gas producer BG Group (BG.L: Quote, Profile, Research, Stock Buzz) lost 4.6 percent although net profit, excluding one-off items, beat forecasts in rising 97 percent to 807 million pounds in the second quarter thanks to high gas prices.

"It may be too early, but there is an emerging view that oil may have at last found a settling point," said Howard Wheeldon, senior strategist at BGC Partners.

"If some form of stability is going to be achieved in the oil price, then it is a good reason for the market to reflect a more positive view."

Miners also eased, with Eurasian Natural Resources (ENRC.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz), Ferrexpo (FXPO.L: Quote, Profile, Research, Stock Buzz), Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz) and Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz) down between 0.2 and 3.7 percent.

UK banks were firmer following their recent strong run after Swiss bank Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) beat forecasts with its second-quarter net profit. [ID:nL23103192]

Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz), HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz), Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) and HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) were up between 0.3 and 1.4 percent.

Rolls-Royce (RR.L: Quote, Profile, Research, Stock Buzz) advanced 2.2 percent after the engine maker met forecasts with an 8 percent rise in first-half profit and promised more growth and a 10 percent dividend hike.

Scottish & Southern Energy (SSE.L: Quote, Profile, Research, Stock Buzz) shed 5.7 percent after it said it expected adjusted pretax profit to show a modest rise in the year to March 2009. (Additional reporting by Michael Taylor; editing by Rory Channing)