Banks, defensives push FTSE higher

LONDON (Reuters) - The leading equity index closed marginally higher on Friday as positive financial and defensive stocks outpaced weaker commodity shares, which tracked a decline in crude and metals prices.

The FTSE 100 index .FTSE rose 2.01 points, or 0.1 percent, to 4,236.28 points in thin trading, with U.S. markets closed for the Independence Day holiday.

"Volumes are light. There's nothing going on. Everyone's watching Andy Murray in the tennis," said Jimmy Yates, head of equities at CMC Markets, referring to Murray's semi-final match against American Andy Roddick at Wimbledon late on Friday.

London's blue chip index finished the week lower for a third straight week, a pattern not seen since the lows of March. The index has jumped 22.4 percent since then.

Banks gained, rebounding after falls on Thursday.

Royal Bank of Scotland (RBS.L) added 0.9 percent, while Barclays (BARC.L), HSBC (HSBA.L) and Lloyds Banking Group (LLOY.L) rose 0.9-2.8 percent.

"There's a bit of bottom fishing going on out there, especially with the market's inability to break the 4,200 support level," said Yates.

Defensive stocks also found support as investors' risk appetite faded following the U.S. jobs disappointment, with tobacco and drug shares moving higher.

AstraZeneca (AZN.L) and Shire (SHP.L) rose 0.2-0.9 percent, while Imperial Tobacco (IMT.L) and British American Tobacco (BATS.L) added 1 and 1.5 percent respectively.

British Airways (BAY.L) added 5.5 percent as the company said it had responded by taking cost cutting measures. It announced a fall in June passenger traffic numbers.

There was little reaction to data showing Britain's dominant services sector expanded for a second month in June but the pace of recovery slowed as new business contracted and firms stepped up the pace of job cuts.

MEDIA UPGRADE

Media stocks were higher, led by Reed Elsevier (REL.L), up 3.9 percent, after Credit Suisse raised its rating on the European media sector to "overweight" from "underweight," and said the sector has significantly underperformed the market and valuations are now at record lows.

BSkyB (BSY.L) was 2.1 percent higher, while WPP (WPP.L) was up 1 percent.

Oil majors fell as crude remained depressed after Thursday's jobless figures from U.S. and Europe clouded the economic outlook.

BP (BP.L), Royal Dutch Shell (RDSa.L), BG Group (BG.L), Cairn Energy (CNE.L) and Tullow Oil (TLW.L) lost 0.3-1.9 percent.

Miners retracted as traders continued to take profits following a surge in prices earlier in the week on the back of prospective corporate activity, and a fall in raw material prices.

Anglo American (AAL.L), BHP Billiton (BLT.L), Xstrata (XTA.L), Vedanta Resources (VED.L) and Rio Tinto (RIO.L) lost 0.5-1.4 percent.

Underwriters to Rio Tinto's rights issue sold the Australian "rump" at A$48.50 each, a 6.3 percent discount to Rio's last traded price, Rio said in a statement on Friday.

Vodafone (VOD.L) saw some selling, down 1.6 percent.

(Editing by David Cowell)