Britain's FTSE rises, buoyed by Cypriot bank branch deal with Greece
* FTSE 100 gains 0.3 percent
* Banks reverse early losses as Greece takes on bank units
* BP and AstraZeneca provide strength to index
* Burberry falls after Mulberry profit warning
By Alistair Smout
LONDON, March 22 (Reuters) - Britain's top share index rose on Friday after Cyprus agreed to spin off Greek units of its banks to Greece, helping banks pare losses in a market underpinned by strength in BP and AstraZeneca.
Banks fell by as much as 1.2 percent in morning trade, led by those with significant exposure to the euro zone, such as Royal Bank of Scotland and Lloyds. But they staged a partial recovery to trade down just 0.2 percent after news of the Greek deal.
With the European Union setting Cyprus a deadline of Monday to raise the billions of euros it needs to secure a bailout, traders were wary of piling in to any rally.
The spin-off "is a positive, but we do need to see more done. Traders are still on tenterhooks at the moment, and until we get a final resolution in Cyprus it will be quite jittery," Manoj Ladwa, head of trading at TJM Markets, said.
"However, you would have thought that with the week we've had investors would have sold off a bit more, so the market is proving resilient."
At 1148 GMT, the FTSE 100 index was up 21.16 points, or 0.3 percent at 6,409.71 points, returning above its 30-day moving average.
Trade was light, however, with just 30 percent of the 90-day average volume traded in the morning, which is usually the busiest period.
Moreover, the index still looked set to snap a 5-week winning streak despite the session's gain.
Three heavyweight risers accounted for the vast majority of the FTSE 100's gains. BP rose 2.6 percent, adding 8.8 points to the index, after announcing an $8 billion share buy-back programme to reward investors after it sold its stake in its Russian unit TNK-BP.
"The buyback of $8 billion of shares in BP has seen them up since the open, and when they're up, with the banks holding up too, that tends to hold the FTSE itself up as well," said Mark Foulds, trader at ETX Capital.
AstraZeneca advanced 2.3 percent as new CEO Pascal Soriot received favourable reviews from analysts after a marathon eight-hour strategy update, and BT led the index with a 3.6 percent gain after a target price hike from Nomura. The two stocks combined to add over 6 points to the FTSE 100.
Topping the fallers was Burberry, which fell 3.6 percent after peer Mulberry issued a profit warning, fuelling fears of a drop in spending among affluent tourists. (Editing by Ruth Pitchford)
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