FTSE Inches Up As Defensive Gains Offset Weak Oil

U.S. president Barack Obama pledged up to $275 billion on Wednesday to help families refinance their mortgages.

Britain's leading share index inched up early on Thursday, with gains in defensive companies and banks offsetting declines in energy stocks weighed down by a weak oil price.

By 0909 GMT the FTSE 100 was up 4.59 points at 4,011.64 after falling 0.7 percent the previous session.

Gloom on the global economy kept wary investors on the sidelines.

"There's a mixed picture, weakness in the oil price is pressuring energy stocks but we're still awaiting clarification on the (U.S.) bailout package and how measures will filter through," said Richard Hunter, head of UK equities at Hargreaves Landsdown.

U.S. president Barack Obama pledged up to $275 billion on Wednesday to help families refinance their mortgages.

Obama and the Federal Reserve chairman tried to persuade a sceptical public that steps taken to ease the credit and economic crisis will work.

However, minutes from the last FOMC meeting show the U.S. central bank policymakers largely gave up hope for economic growth in 2009 and discussed setting an inflation target as a deepening recession heightened fears of a dangerous decline in prices.

The grim economic backdrop has seen investors buying into shares seen as resilient to recession.

"We've seen a bit of strength in defensive shares recently amid the nervousness and that theme seems to be continuing," Hunter said.

Drugmaker Shire gained 1.1 percent while larger peer GlaxoSmithKline added 0.2 percent.

Energy companies were generally softer as crude prices held around the $35 a barrel level.

BP fell 0.3 percent, while BG Group lost 0.8 percent. Royal Dutch Shell, however, gained 0.1 percent after its chief executive said it will discuss further co-operation with Gazprom on energy projects in Russia's Far East.

Professional publisher Reed Elsevier was among the top blue-chip gainers, up 4.3 percent after it reported a 24 percent rise in 2008 adjusted earnings per share as its low exposure to advertising shielded it from the downturn.

Banks, share prices of which have swung wildly in recent weeks, were mostly higher.

Lloyds Banking Group added 6.1 percent, Royal Bank of Scotland gained 2.8 percent and Barclays was up 3.6 percent.

Miners were mixed as metals prices languished near recent lows on worries about the demand outlook.

Rio Tinto added 1.8 percent. Leading shareholders want Jim Leng to be reinstated as its chairman-designate in a move that threatens to throw the board of the embattled miner into turmoil, the Times reported.

Xstrata fell 0.2 percent after reports it is facing a potential revolt from shareholders over its 4 billion pounds fundraising as big City investors prepare to counter government claims they are ineffectual in exercising influence, the Guardian said.

Land Securities added 2.6 percent after the Financial Times said it was finalising plans for the latest rights issue in the sector, adding that the property company would also reveal updated asset values in an announcement aimed for Thursday.

BAE Systems added 0.7 percent after Europe's biggest military contractor said it expected good growth in 2009 after earnings for the previous year came in slightly ahead of forecasts.

Kingfisher fell 2.1 percent after Europe's biggest home improvements retailer posted a 5.5 percent fall in fourth quarter underlying sales but said it was on track to meet analysts' full-year profit forecasts.

Investors will look to UK public borrowing data at 0930 GMT for more clues on the state of UK finances and how well the economy will be able to hold up in the face of a global recession.