FTSE rises by midday on commodities; banks weigh

By Dominic Lau

LONDON, May 19 (Reuters) - Britain's top share index rose by midday on Monday, extending the previous session's gains, as commodity shares tracked firmer raw material prices, offsetting weaker banks.

By 1051 GMT, the FTSE 100 .FTSE was up 15.7 points, or 0.25 percent at 6,320.0, after hitting its highest closing level in four months on Friday. Major European indexes also traded higher by mid-session.

"Investors are still pretty confident on the outlook of the stock market as opposed to the negative headlines that we are seeing at the moment," said Henk Potts, equity strategist at Barclays Stockbrokers.

"There was a lot to be disappointed about from the macro economy last week but increasingly investors are believing the second half of the year looks brighter than the first half."

Miners were in demand, with BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz), Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz) and Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz) up between 0.2 and 5.4 percent.

Kazakhmys, which topped the FTSE 100 gainers, was also lifted by Credit Suisse's move to add the stock to its Europe focus list, while Vedanta was boosted by a rating upgrade from Citi.

Oil shares also gained as crude prices CLc1 held near $126 a barrel. BP (BP.L: Quote, Profile, Research, Stock Buzz) advanced 0.7 percent, Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) added 1.3 percent and gas producer BG Group (BG.L: Quote, Profile, Research, Stock Buzz) put on 1.9 percent.

Banks were the heaviest negative weight on the index, despite comments from Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) Chief Executive Josef Ackermann that the end of the credit crisis was getting closer and the U.S. real estate market should recover in the second half of the year. [ID:nL18189630]