FTSE rises on commodities as banks slide further

By Simon Falush

LONDON (Reuters) - Britain's top share index crept back from a four-year low set earlier in the session by midday on Tuesday, as gains in energy stocks outweighed heavy losses in the ailing banking sector in volatile trade.

The biggest single cut in Australian interest rates since 1992 lifted stocks in Asia and helped commodity and oil prices recover from their heavy falls the previous session.

But in see-sawing trade, the FTSE 100 swung into negative territory as banking stocks tumbled, before clawing back some of the dramatic losses it posted the previous session.

By 12:01 p.m. the FTSE 100 was up 52.2 points at 4,641.4 after posting its biggest-ever one-day points fall to a four-year low on Monday. The index is down 28.1 percent for the year.

Energy stocks benefited from higher crude prices with BP up 0.8 percent, and Royal Dutch Shell gaining 0.9 percent.

Miners gained as metals recovered, helped by the Australian rate cut move, with Lonmin, Anglo American and Fresnillo up between 0.8 and 2.9 percent.

Banks were once again in the red adding to heavy losses they saw on Monday, as jitters on the sector came to the forefront again with traders citing media reports that the UK government may invest billions of pounds in banks including Royal Bank of Scotland.

Barclays' chief executive John Varley said it has not requested capital from the UK government and it has no reason to do so, RBS declined to comment.  Continued...