FTSE ticks higher early as commodity stocks gain

* FTSE 100 rises 0.2 pct

* Energy shares track rising crude prices

* Retailers, telecom shares fall

By Atul Prakash

LONDON, Aug 29 (Reuters) - Britain's top share index ticked higher early on Friday as a rise in commodity shares on the back of firmer oil and metal prices and positive banks nullified the impact of weaker telecoms and retail stocks.

By 0839 GMT, the commodity-heavy FTSE 100 .FTSE was up 0.2 points at 5,611.8, after closing at a two-month high in the previous session.

The banking sector was one of the top-weighted gainers on the index, as investors' optimism about a recovery in the global economy got a lift following the release of U.S. growth data on Thursday.

The U.S. government reported the economy grew at a surprisingly robust 3.3 percent in the second quarter, helped by strong export growth and consumer spending.

Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) and HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) rose between 0.7 and 2.8 percent.

"Are the markets going to settle down any time soon and liquidity is going to improve? The answer to both of the questions is probably "no". Is the situation going to get any worse? The answer to that is probably "no" as well," said Neil Parker, market strategist at Royal Bank of Scotland.

"I am reasonably bullish about the market as we are heading into the fourth quarter. I think we are going to see some improvement in the numbers."

But shares in embattled UK mortgage lender Bradford & Bingley BB.L fell 1 percent after it posted a 26.7 million pound ($48.9 million) first-half pretax loss, hit by investment losses and worsening margins.

B&B, Britain's largest buy-to-let lender, said bad debts had continued to rise. It had posted a pretax profit of 180.4 million pounds a year ago, before it was battered by turbulence in the financial and housing markets.

Investors looked for any sign of a cut in UK interest rate cuts this year.

Bank of England policymaker David Blanchflower said on Thursday the central bank could no longer be complacent on rates because the economy was already in a recession, hammering home his long-held argument that rates need to be cut. Investors awaited U.S. PCE price index data at 1230 GMT and Chicago PMI figures at 1345 GMT for near-term market direction.   Continued...