FTSE flat as commods lead; BoE weighs on banks

By Michael Taylor

LONDON, May 21 (Reuters) - Britain's blue-chip stock index traded flat by mid-session on Wednesday as rising energy prices gave commodity shares a bounce, but hawkish Bank of England (BoE) minutes weighed on banks.

At 1132 GMT the FTSE 100 .FTSE had edged up 3.4 points, or 0.1 percent to 6,195 in volatile trading and after shedding 2.9 percent in the previous session in its biggest one-day fall in two months.

The BoE minutes showed that policymakers voted 8-1 to hold interest rates at 5 percent this month, as most members were worried that lowering rates from 5 percent would make it harder to control inflation expectations, given a shock spike in consumer price inflation to 3 percent in April. [ID:nL21168724]

On the upside, oil shares rebounded and accounted for a massive 49 positive index points, aided by U.S. crude prices CLc1 which hit $130 a barrel.

BP (BP.L: Quote, Profile, Research, Stock Buzz) advanced 3.1 percent, Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) added 4.4 percent, BG Group (BG.L: Quote, Profile, Research, Stock Buzz) climbed 4.3 percent and Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) tacked on 4.5 percent.

"The market had a huge correction yesterday," said David Battersby, stockbroker at Redmayne-Bentley. "I'm still a huge bull of the commodity story."

"The oil price rising as it is, is a huge benefit ... because the more it becomes costly, the more cost-efficient it is to look at alternatives."

Inflationary concerns helped boost precious metal prices, as miners rose after profit-taking hit the sector on Tuesday. Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz), BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) and Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) added 0.2-2.2 percent.