Mideast tensions weigh on FTSE, India hopes spur BP

(Reuters) - Upbeat comment from BP on its activities in India added to a rebound in energy stocks, but Britain's top share index remained hamstrung on Thursday by the ongoing troubles sweeping the Middle East and North Africa.

BP's (BP.L) Indian head, Sashi Mukundan, estimates there are 15 trillion cubic feet of gas resources in the 23 blocks it has bought into in its $7.2 billion deal with Reliance Industries (RELI.BO) and there could be more.

"The BP/Reliance deal is spectacularly positive and shows a major commitment to India and makes energy capital in India look more attractive," Daniel Slater, analyst at Arden Partners says.

BP gained 1.0 percent on the news, which helped spark a 3.2 percent rally in oil explorer Cairn Energy (CNE.L).

Cairn Energy, which has blocks in India, is currently trying to sell a majority stake in its Indian arm Cairn India (CAIL.BO) to Vedanta Resources (VED.L).

Energy stocks were the major ray of light on an index currently under a cloud of geopolitical troubles.

By 6:38 a.m. EST, the FTSE 100 .FTSE was down 15.20 points, or 0.3 percent, at 5,908.33, anchored below seven-month technical support level of 5,920.

London's blue chip index has shed near 3 percent on the week, as the price of oil has hit multi-year highs, threatening to derail the global economic recovery.

Brent crude surged to its highest price since August 2008 on concern the bloody unrest that has cut more than a quarter of OPEC member Libya's output could spread to other producers, including top exporter Saudi Arabia.

"The closest comparison to the current MENA unrest is the 1990-91 Gulf War. If Libya and Algeria were to halt oil production together, prices could peak above $220 a barrel," Nomura said in a note.

BANKS

Risk-sensitive banks .FTNMX8350, were the major fallers, down sharply as investors looked uneasily at the unrest in the Middle East and North Africa.

RBS (RBS.L) came off worst, down 3.8 percent, as its results were met with disappointment.

Bad debts from Ireland, an uninspiring investment banking performance and lack of dividend put pressure on the shares, traders said.

Lloyds Banking Group (LLOY.L) were 1.4 percent lower ahead of results on Friday.

British American Tobacco (BATS.L) fell 2.0 percent, after the maker of Kent, Dunhill, Lucky Strike and Pall Mall cigarettes reported full-year results.

"(The numbers) all looked in line, the dividend was slighter better than expected and (it announced) a 750 million pound buyback but the market expected 1 billion so that was a little disappointing," Alwyn Phillips, a trader at IG Index, said.

GKN (GKN.L) shed 2.3 percent after Citigroup cut its rating for the automotive and aerospace parts group to "hold" from "buy" ahead of upcoming full-year results.

"We sense a pause in the pace of its (GKN's) recent rapid profit rise," Citigroup says in a note.

Capita (CPI.L) was the star FTSE 100 performer, up 7.8 percent, as investors cheered the outsourcing group's full-year results.

"(We expect) the valuation (to) revert from the current, historically low level to at least the high-teens price earnings that a company of this quality deserves," Peel Hunt said.

Peer Serco (SRP.L) added 2.5 percent.

(Source: http://www.reuters.com/article/2011/02/24/us-markets-britain-stocks-idUSTRE71N1SE20110224?pageNumber=2)