FTSE up as energy stocks gain

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At 8:57 a.m., the FTSE 100 was up 0.24 percent at 5,980.2, after losing 1.8 percent on Thursday. The benchmark index has advanced 1.6 percent so far this week, but is still down more than 7 percent for the year on concerns over the U.S. economy.

"The market still looks very nervous. The banks are still the key talking point," said Keith Bowman, analyst at Hargreaves Lansdown.

"The market is also broadly digesting the comments we had from (Fed Chairman Ben) Bernanke yesterday. We have seen some ramification of his comments in the continuing weakness of the dollar."

Bernanke warned on Thursday that the troubled housing sector could cause failures of small banks, dragging U.S. stocks lower. In Asia, Japan's Nikkei average fell 2.3 percent.

Banks were the biggest losers on the FTSE 100, with Barclays, Royal Bank of Scotland, HBOS, Lloyds TSB, Alliance & Leicester and HSBC losing between 0.3 and 1.9 percent.

London-based hedge fund Peloton Partners LLP became the latest victim of the global credit market turmoil when it told investors on Thursday it was liquidating its $2 billion asset-backed securities fund.

Oil shares, however, offered some support to the market, with crude prices touching a new high above $103 a barrel.

Oil major BP put on 1.3 percent, while gas producer BG Group gained 2.1 percent and Royal Dutch Shell added 0.3 percent.

Index heavyweight Vodafone rose 0.7 percent after Cazenove lifted its estimate for the mobile phone giant's 2008/09 operating profit.

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