* FTSE 100 rises 0.1 percent
* Banks pare losses but defensive stocks lead gainers
* Traders ready for the possible higher open on Monday
* BP fuels FTSE's rise with buyback plan
By Alistair Smout
LONDON, March 22 Britain's top share index rose
on Friday as Cyprus edged closer towards securing a bailout to
avoid financial meltdown, with traders positioning themselves
for a possible resolution over the weekend.
Defensive sectors such as telecoms and pharmaceuticals led
gainers, as investors were unwilling to place bets on more risky
sectors while a deal was yet to be finalised.
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.
However, they staged a partial recovery to trade down just
0.2 percent after news that Cyprus had agreed to spin off Greek
units of its banks to Greece.
They weakened again as it became clear that a final deal
would not be struck during trading hours. However, traders were
reluctant to spark a sell-off, wary of the potential for a
substantially higher open - or "bullish gap" - on Monday, should
the crisis be resolved over the weekend.
"After last weekend's rather cackhanded bailout plan, we
gapped lower, and the fear is that if we come to a new bailout
agreement, we'll gap higher. So no one really wants to be caught
short," Michael Hewson, senior market analyst at CMC Markets,
"But while a resolution may well assuage fears of a massive
sell-off, overall Europe's underlying problems are still there."
The FTSE 100 index closed up 4.21 points, or 0.1
percent at 6,392.76 points, although the turmoil in Cyprus saw
the index snap a 5-week winning streak despite the session's
The FTSE 100 was down 1.5 percent on the week - its biggest
weekly loss since November.
BP rose 1.8 percent after announcing an $8 billion
share buy-back programme to reward investors after it sold its
stake in its Russian unit TNK-BP. The 6.2 points it
added to the FTSE 100 was enough to bring the index into
"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.
BP aside, the most popular stocks were in more "defensive"
sectors. Pharmaceutical AstraZeneca advanced 3.3 percent
as new CEO Pascal Soriot received favourable reviews from
analysts after a marathon eight-hour strategy update.
Telecom BT led the index with a 3.9 percent gain
after a target price hike from Nomura. The two stocks combined
to add over 8 points to the FTSE 100.
Topping the fallers was Burberry, which fell 4.1
percent after peer Mulberry issued a profit warning, fuelling
fears of a drop in spending among affluent tourists.