FTSE rises by midday on oils; Tullow rises

* Oils up on firmer crude; Tullow Oil rises on new oil finds

* Insurers down, unsettled by AIG sale delay

* Pharmas extend weakness

By Dominic Lau

LONDON, Dec 11 (Reuters) - Britain's leading share index was 0.4 percent higher by midday on Thursday as gains in heavyweight energy stocks eclipsed weakness in financials and drugmakers.

By 1137 GMT, the FTSE 100 .FTSE was up 16.25 points at 4,383.53, after trading as much as 1.4 percent lower earlier in the session.

The UK benchmark shed 0.3 percent on Wednesday to snap a two-day winning run, and is still down 32 percent for the year.

Energy stocks were the top-weighted gainers as crude prices CLc1 firmed and after Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) announced new oil finds in Ghana and Uganda, which it expects to boost reserves.

Tullow Oil shares rose nearly 17 percent, while BP (BP.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) and BG Group (BG.L: Quote, Profile, Research, Stock Buzz) advanced between 1.4 percent and 4.7 percent.

Miners were generally higher, with the FTSE 350 mining index .FTNMX1770 up 0.9 percent. Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), Wednesday's big gainer on cost-cutting moves, rose 5 percent, while Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), Fresnillo (FRES.L: Quote, Profile, Research, Stock Buzz) and Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz) were up between 2.1 percent and 8.5 percent.

Bank of England (BoE) policymaker Kate Barker told the Glasgow-based Herald newspaper that Britain's ailing economy would start to recover towards the end of 2009, but that it would be hard to judge how fast that improvement would be. [ID:nLB071051]

A UK economist at Commerzbank, Peter Dixon, said: "Most of the bad news is already in the market. Is it going to get worse? Sure. The economic news is going to get awful worse.

"But the market will only react though if the numbers continue to get worse. In another words, the recession is quite prolonged."

A survey showed British factory orders fell sharply in December as export orders shrank at their fastest pace in more than five years. [ID:nLB28859]

Banks were the main drag on the index, with HSBA (HSBA.L: Quote, Profile, Research, Stock Buzz) falling 2 percent, Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) dropping 3.7 percent and Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) shedding 4 percent.

INSURANCE PREMIA

Insurers also languished on uncertainty over AIG (AIG.N: Quote, Profile, Research, Stock Buzz) asset sales and after Goldman dropped Aviva (AV.L: Quote, Profile, Research, Stock Buzz) from its "conviction buy" list.

AIG, which is looking to sell assets around the globe to repay a $152 billion U.S. government rescue package, said difficult markets may force it to delay divestment plans.

Aviva sagged 2.6 percent, Friends Provident (FP.L: Quote, Profile, Research, Stock Buzz) sank 6.3 percent, Standard Life (SL.L: Quote, Profile, Research, Stock Buzz) lost 5.9 percent and Legal & General (LGEN.L: Quote, Profile, Research, Stock Buzz) shed 3.1 percent.

"'Tis the season to be realistic," said Felix Riley, head of binary betting firm ChoiceOdds.

"Domestically, the demise of Woolworths compounds the gloom, and the slump of the pound against the euro is a damning verdict by the markets on the UK economy."

Pharmaceuticals came under pressure, extending previous session's weakness after the European Commission adopted a package of reforms for the sector, which includes concessions to companies reselling prescription drugs.

Also, U.S. drug reviewers presented evidence of life-threatening risks from a class of asthma drugs to an advisory panel considering whether to recommend limits on medicines now used by millions.

The inhaled drugs include one of the world's top-sellers, GlaxoSmithKline's Advair as well as AstraZeneca's blockbuster Symbicort.

GlaxoSmithKline (GSK.L: Quote, Profile, Research, Stock Buzz), AstraZeneca (AZN.L: Quote, Profile, Research, Stock Buzz) and Shire (SHP.L: Quote, Profile, Research, Stock Buzz) slipped between 0.2 and 1.5 percent.

Among mid-caps, Punch Taverns (PUB.L: Quote, Profile, Research, Stock Buzz) slumped 5.7 percent on renewed fears over the group's debt after Charles Winston, leisure analyst at stockbroker Redburn Partners, advised clients to sell and put a fair value of nil on the stock. (Additional reporting by Jon Hopkins; Editing by Andrew Macdonald)