FTSE down on mixed results, lingering credit woes

By Michael Taylor

LONDON, July 26 (Reuters) - The FTSE 100 .FTSE of Britain's leading shares dipped to a near three-month low on Thursday after a flurry of corporate results provided limited support as U.S. credit worries remained. Worries that a rise in defaults on U.S. subprime mortgage loans could spiral into a broader financial crunch have stalked markets since mid-June.

At 1054 GMT, the UK's leading index was 29.7 points, or 0.5 percent lower at 6,424.6.

On the downside, a 40 million pound ($82.39 million) bill for UK floods in June helped push Legal & General's (LGEN.L: Quote, Profile, Research, Stock Buzz) general insurance business into an operating loss in the first half of the year.

L&G's non-life unit plunged to a 38 million pounds operating loss during the first six months of 2007, largely due to the impact of the June floods, which badly hit central and northern England. L&G shares shed 6.2 percent.

In other companies reporting, BT Group (BT.L: Quote, Profile, Research, Stock Buzz) showed it has pulled further ahead in Britain's highly competitive broadband market as it met forecasts with a 3 percent increase in first-quarter core earnings and revenues.

But its shares fell 2.7 as analysts said there was little in the statement to excite a shaky market while some noted that its free cash flow figure was disappointing.

"There is some nervousness around that we don't truly understand the extent of the problems within the subprime market and whether it can be contained to that individual area or whether it'll start to contaminate the wider economy," said Henk Potts, a strategist at Barclays Stockbrokers.

Also in negative red, Intercontinental Hotels Group (IHG.L: Quote, Profile, Research, Stock Buzz) shed 3.8 percent as traders cited a lack of new information on continued bid speculation that has boosted the share price in recent months and the turmoil that has hit the credit market within the last six weeks.

OIL OFFERS LIGHT RELIEF

Supporting sectors included oils after U.S. crude oil surged more than $1 to $77, its highest in almost a year, on increasing demand from refiners in the world's top consumer.

The rally lifted U.S. crude above London Brent for the first time since February, restoring its traditional premium. Analysts and investors pointed to U.S. data released on Wednesday that showed crude stocks fell for a third consecutive week [EIA/S].

Among heavyweight oil stocks, BG Group (BG.L: Quote, Profile, Research, Stock Buzz) added 2.5 percent to top the FTSE 100 gainers, while BP (BP.L: Quote, Profile, Research, Stock Buzz) gained 1.9 percent.

Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) was up 2.2 percent after posting a 20 percent rise in second-quarter profits as fat refining margins helped outweigh lower output.

In pharmaceuticals, GlaxoSmithKline (GSK.L: Quote, Profile, Research, Stock Buzz) tacked on 0.8 percent after Morgan Stanley raised its price target to 1,400 pence from 1,300 pence and despite a price target cut from ING.