FTSE up 1.2 pct as bid talk buzzes, oils power on

By Rebekah Curtis

LONDON, May 16 (Reuters) - Britain's blue-chip index rose 1.2 percent at midday on Friday, as bid activity powered British Energy (BGY.L: Quote, Profile, Research, Stock Buzz) and crude price stormed past $125 a barrel to inject zest into heavyweight oil shares.

Oil major BP (BP.L: Quote, Profile, Research, Stock Buzz) added 1.6 percent and rival Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) rose 2.1 percent as U.S. crude oil CLc1 surged on a weaker dollar and a bullish market for distillate fuels as China and Europe scramble for diesel amid thin global supplies. BG Group (BG.L: Quote, Profile, Research, Stock Buzz) put on 1.6 percent.

Topping the gainers, shares in London Stock Exchange (LSE.L: Quote, Profile, Research, Stock Buzz) surged 7.8 on market talk of bid interest after Sanford Bernstein said in a report the fall in its share price has made the UK bourse an affordable target of rivals Nasdaq (NDAQ.O: Quote, Profile, Research, Stock Buzz) and NYSE Euronext (NYX.N: Quote, Profile, Research, Stock Buzz).

Nuclear power generator British Energy (BGY.L: Quote, Profile, Research, Stock Buzz) leapt 6.5 percent to 724 pence after saying it had received a range of takeover proposals, including some priced above Thursday's 680-pence close. For more double-click on [ID:nL16387334].

By 1129 GMT, the FTSE 100 .FTSE was up 75.4 points at 6,327.2, as shares forged higher across Europe. U.S. stocks looked set to extend gains after the S&P 500 ended the previous session at its highest close since January.

"The market's been incredible lately," said Colin Morton, an investment director at Rensburg Fund Management. "People are getting a bit more optimistic that life is getting a little better."

He added, however, that is was too early to have confidence in a sustained upturn. "I'm a little nervous of the market because it's had such a strong run in such a short period and some of the issues that we've had could come back to haunt us."