* FTSE 100 down 0.2 pct on the day, up for the week
* RBS jumps 11 pct as UK upturn boosts results
* BSkyB falls 5 pct on news of 4.9 bln pound acquisition
* GSK pegs back FTSE on corruption allegations
By Francesco Canepa
LONDON, July 25 British lenders who focus on the
domestic market outperformed a slightly negative FTSE 100
index on Friday after strong results from Royal Bank of
Scotland and solid economic growth data.
The FTSE, down 0.2 percent on the day but still up 0.8
percent on the week, succumbed to profit taking in late trade as
Russia accused Ukraine of having shelled across the border,
reviving investor concerns about the conflict there.
BSkyB was the heaviest faller on the FTSE, sliding 5
percent, after the company agreed to pay 4.9 billion pounds
($8.3 billion) in cash to buy Rupert Murdoch's pay-TV assets in
Germany and Italy, partly financing the deal by the placing of
Shares in RBS, however, surged 11.5 percent, on track for
their biggest rise in four years, after the bank posted a
surprise pretax profit for the second quarter, citing an
economic upturn that allowed it to write back losses that had
been booked on bad loans.
Fellow British-focused lenders Barclays and Lloyds
Banking Group, which are due to report next week, were
up around 2.2 percent and 1.5 percent, respectively.
"Credit quality keeps improving, especially in distressed
assets such as commercial real estate," said Espirito Santo
analyst Shailesh Raikundlia, who has a "neutral" recommendation
on the stock.
"In general, the credit environment is pretty benign and
that should come through in banks' results."
The positive mood on the British economy was underpinned by
data showing economic output in the second quarter finally
topped levels seen before the financial crisis struck six years
"The UK is having the best of times," said Gerard Lane, a
strategist at Shore Capital.
Lane said he expected the pace of economic growth in Britain
to slow versus the rest of the world next year, however, owing
to a tighter monetary policy by the bank of England and lower
public spending after a general election due to be held in May.
Financial shares added 11 points to the FTSE 100,
which was down 13.55 points at 6,807.91 points at 1452 GMT.
Other gainers that focus on the domestic market included
British grocer J Sainsbury, up 1.6 percent, with
traders citing a Daily Mail report of fresh bid interest from
Qatari investors. The company declined to comment.
Among mid-caps, shares in two of Britain's biggest
construction companies, Balfour Beatty and Carillion
, rallied after they confirmed that they were in early
talks on a possible 3 billion pound ($5 billion) merger.
Network operator Vodafone added a further 5.3 points
to the FTSE as it rose 2.6 percent after saying its performance
had begun to stabilise in several European
Pegging back the FTSE on Friday were export-oriented
companies such as heavyweight drugs firm GlaxoSmithKline
and fashion brand Burberry.
GSK knocked 8.3 points off the index as it faced new
allegations of corruption, this time in Syria, where the
drugmaker and its distributor have been accused of paying bribes
to secure business, according to a whistleblower's email.
Burberry fell 1.8 percent after French luxury goods group
LVMH posted below-forecast second-quarter sales and
profits, hit by a drop in demand from China.
(Additional reporting by Lionel Laurent; Editing by Susan