* FTSE 100 index rises 0.3 percent
* Blue-chip index heads for weekly decline
* Rolls-Royce up on engine deal hopes
By Atul Prakash
LONDON, June 27 Britain's top share index rose
on Friday, with Rolls-Royce gaining on a Reuters report saying
Airbus was very close to a decision to upgrade its A330
planes with the aero-engine maker as an exclusive supplier.
Rolls-Royce rose 1.8 percent to feature among the biggest
gainers on the FTSE 100 index, which was up 0.26 percent
at 6,752.29 points by 0755 GMT. However, the index was heading
for a weekly drop after falling 1.5 percent this week.
Although the index rose on Friday, investors were reluctant
to place big bets in the absence of new market catalysts and
ahead of the second quarter earnings season. Violence in Iraq
also dampened appetite for riskier assets.
"Investors continue to search for the next crucial market
catalyst. Central bank action and geopolitical events remain
high on the agenda," Hargreaves Lansdown analyst Keith Bowman
"Given the degree of uncertainty, a balanced diversified
investment portfolio looks to remain important."
The FTSE 100 has slipped about 2 percent from its 14-year
high in May and is now about 3 percent away from a record high
set in late 1999. It slipped to a two-month low on Thursday
before recovering to close flat.
"The UK index ended barely changed (on Thursday) and the
worry here is that no big bounce has followed its drop to
two-month lows, leaving it vulnerable to further near-term
weakness," Charles Stanley analyst Bill McNamara said.
The index will find some support at its 100-day moving
average at 6,725 points, while the next resistance is seen at
6,792 points, its 50-day moving average.
Analysts advised caution on the market near-term.
"We remain cautious on directional trends - not just in the
UK but across global equity markets," Ian Richards, head of
equity strategy at Exane BNP Paribas, said in a note.
"But there is a strong relative trade opportunity
developing. After the acute, and almost ubiquitous, weakness of
the last 3 months, we think investors should start building
positions ahead of the rate hike."
(Editing by Louise Ireland)