UK Stocks-Factors to watch on Friday July 22

Britain's FTSE 100 index is seen opening up as much as 36 points, or 0.6 percent on Friday, according to financial bookmakers, tracking overnight gains on Wall Street and in Asia as investors cheered a new rescue package for Greece and hopes for a breakthrough in the U.S. debt deadlock.

However, trading is likely to be volatile ahead of the expiry of monthly futures and options mid-morning in London.

Leaders of the euro zone announced late on Thursday a second bailout for debt-stricken Greece that includes an extra 109 billion euros of government money as well as a significant contribution from private sector bondholders.

The UK blue chip index closed 46.07 points or 0.8 percent higher on Thursday at 5,899.89, having endured a choppy session, trading in a 137 point range as nervous investors jostled positions awaiting the announcement from Brussels.

U.S. blue chips added 1.2 percent on Thursday as the concrete action from Europe on its debt crisis and, more importantly, signs of progress on the U.S. debt talks heartened investors.

Unexpectedly robust earnings results from Morgan Stanley , shares in which rose 11 percent, extended a relief rally to U.S. banking stocks.

After the Wall Street closing bell, however, Microsoft shares shed 0.8 percent after the world's largest software company posted a bigger-than-expected 30 percent increase in fourth-quarter profit, but profit from its core Windows product fell on soft personal computer sales.

Asian stocks rose on Friday, with euro-zone sensitive plays like HSBC , which makes up a chunky 15 percent of Hong Kong's Hang Seng index, up nearly 3 percent, helping that index gain 1.7 percent.

No important macroeconomic data will be released in Britain or the United States on Friday.

"The strong rally in the FTSE 100 suggests that a combination of new buying and short-covering may be driving the market higher," said James A. Hyerczyk, Analyst at Autochartist.

"One clue that buyers are beginning to step in is the secondary higher bottom formed at 5,752.81 against the June 17 bottom at 5,644.38. The month long support base being formed could turn into an explosive rally should buyers drive this market through the top at 6,084.08," Hyerczyk said.

* Greek deal lifts euro, stocks; outlook wary

* US STOCKS-U.S. debt news, euro debt agreement fuel rally

* Nikkei gains on banks, euro-sensitive stocks

* Euro rallies on Greece deal, US debt impasse hurts dollar

* LME copper extends fall to 3rd day, eyes 4th week of gains

* Gold steady after Europe debt deal, US deficit talks eyed

UK stocks to watch on Friday are:

BP

BP Solar is closing its U.S. manufacturing facility and will refocus is business on developing solar power projects rather than making panels for them, a company spokesman said on Thursday.

ROYAL DUTCH SHELL (RDSa.L)

Peter Sharpe, an executive at Royal Dutch Shell (RDSa.L) sees a new Chinese partnership with state-owned China National Petroleum as an opportunity to avoid paying oilfield service companies for drilling they could do just as effectively themselves.

LLOYDS BANKING GROUP

HBOS, bought by Lloyds Banking Group at the height of the financial crisis, is facing the prospect of disciplinary action from the UK's Financial Services Authority, The Independent said.

LONDON STOCK EXCHANGE

Hong Kong Exchanges and Clearing Ltd , the world's most valuable and profitable exchange operator, intends to offer about HK$52 billion ($6.7 billion) to take over the London Stock Exchange , media reports said on Friday.

Also, the UK has opted out of an European Central Bank project to establish a platform for settling share trades from across the region that aims to slash trading costs for investors, the Financial Times said.

AVIVA

Various newspaper market reports highlighted vague bid speculation surrounding the British insurer, with a price of 600 pence a share mentioned, and continental European names such as Allianz and Zurich Financial highlighed as likely predators.

C&W WORLDWIDE

Shareholders launched an attack on the board of Cable & Wireless Worldwide at the company's annual meeting on Thursday, with almost 40 percent refusing to back its lucrative executive incentive plan, The Times said

RETAIL

John Lewis , Britain's biggest department store chain, said on Friday it would step up the pace of its expansion by opening at least 10 new "flexible format" stores, eventually creating 3,000 jobs.

Also, John Lewis says its latest weekly department store sales rose 3.7 percent. .

VODAFONE

The mobile telecoms firm issues a trading update.

C&W COMMUNICATIONS

The telecoms carrier issues a first-quarter trading update.

UNITED UTILITIES

The multi-utility issues a trading update.

BEAZLEY

The insurer posts first-half results.

CLOSE BROTHERS GROUP

The investment bank issues a trading update.

VECTURA

The inhaled drugs firm holds is annual general meeting.

KCOM GROUP

The telecoms carrier holds its annual general meeting.

REGAL PETROLEUM

The oil & gas explorer holds its annual general meeting.

STRATEGIC NATURAL RESOURCES

The South African coal explorer holds its annual general meeting.

EAST BALKAN PROPERTIES

The commercial property investor holds its annual general meeting.

TODAY'S UK PAPERS

> Financial Times

> Other business headlines Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News visit topnews.reuters.com (Editing by Hans-Juergen Peters)

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