FTSE up as crude falls ease inflation fears

* FTSE 100 rises 0.4 pct

* Commodities trade lower as energy, metal prices fall

* Falling crude price eases inflationary concerns

By Michael Taylor

LONDON, Aug 15 (Reuters) - Britain's blue-chip index rose early on Friday as lower oil prices helped reduce concerns over spiralling inflation, while dragging commodity stocks lower.

At 0735 GMT the FTSE 100 .FTSE was up 19.4 points, or 0.4 percent at 5,516.8 to extend a 0.9 percent rise in the previous session.

As U.S. crude CLc1 prices slipped to about $113 a barrel, heavyweight oil companies sagged. BP , Royal Dutch Shell and Tullow Oil shed between 0.2 and 0.7 percent.

BP and its partners in oil firm TNK-BP will meet next month in a bid to resolve a row over management and a share float, a source close to the board said, as the Russian co-owners moved closer to oust TNK-BP's head.

Adding to the negative oil sector sentiment, the International Energy Agency said oil demand in Western countries is set for its biggest fall in 25 years as the global economic slowdown intensifies and consumers respond to high prices, the Times newspaper reported.

But the falling energy prices helped buoy British Airways and Carnival , traders said, with the airliner and cruise ship operator 2.3 and 2.8 percent higher, respectively.

Retailers also rose as the inflationary threat weakened, with Next , Kingfisher and Carphone Warehouse up 1.9-2.5 percent.

"With some European markets closed and little if any interesting corporate news, it looks as if we are going nowhere very slowly today," said Howard Wheeldon, senior strategist at BGC Partners.

"As far as oil goes ... we've moved into a very new world and I don't think it's right to take a view that the oil price can be sustainable at below $100."

"We may be lower for a bit but you should still expect oil hovering closer -- and hopefully remaining -- to $120 and perhaps we can begin to live with that," he added.

Sterling stuck a 22-month low against the dollar, and the euro hit a six-month low against the U.S. currency.

In banking shares, Bradford & Bingley (BB.L: Quote, Profile, Research, Stock Buzz) was up 0.5 percent ahead of the close its 400 million pounds rights issue.

The Guardian newspaper said six high street banks could be left with stakes of at least 3 percent in Bradford & Bingley following its cash call. The six banks are Abbey, HBOS , HSBC , Lloyds TSB , Royal Bank of Scotland and Barclays .

Royal Bank of Scotland , Barclays and Lloyds TSB all traded positive as banks accounted for over 9 positive index points.

RSA Insurance Group extended large gains from the previous session to rise 1.5 percent on vague press reports of a possible bid for the company. RSA declined to comment.

U.S. industrial production and capacity utilisation data for July and the Reuters/University of Michigan August preliminary consumer sentiment are due to be released from 1315 GMT.

Many European markets are closed or are suffering weaker trading volumes due to Assumption Day.

MINERS LOSE GROUND

Mining companies tracked weaker metal prices MCU3 MZN3 with Antofagasta , Kazakhmys , Xstrata and Anglo American down 2-3.5 percent.

Further on the upside, Vodafone tacked on 0.8 percent after the Financial Times said it was in talks with TDC , Denmark's leading telecommunications company, about buying part of its stake in Polkomtel, Poland's second-biggest mobile phone operator.

Among midcaps, British recruitment company Michael Page International shed 2.1 percent after it rejected an approach worth 1.3 billion pounds ($2.43 billion) from Swiss rival Adecco, saying it materially undervalued the company. (Additional reporting by Dominic Lau; Editing by Hans Peters)