December 16, 2016 / 5:06 PM / 7 months ago

Britain's FTSE posts 2nd week of gains, oil lends support

3 Min Read

* FTSE 100 index down 0.2 pct at close

* UK oil stocks hit 2-year high

* Micro Focus falls after downgrade (Recasts, adds quote and detail, updates prices at close)

By Kit Rees and Atul Prakash

LONDON, Dec 16 (Reuters) - Britain's top share index edged higher on Friday, building on a seven-week high hit the previous day and buoyed by a rally among oil stocks, though IT firm Micro Focus dropped after a rating downgrade.

The blue-chip FTSE 100 closed 0.2 percent higher at 7,011.64 points after climbing on Thursday to 7,010.48 points, its highest level since late October. The index has gained more than 12 percent so far this year, after climbing 3.3 percent last week.

Energy stocks added the biggest number of points to the index, with shares in BP rising 2.1 percent and Royal Dutch Shell gaining 0.9 percent.

The FTSE 350 oil & gas index hit its highest level since September 2014 after the price of oil rose as producers showed signs of complying with a global deal to reduce output.

"It's also been a good week for oil and gas producers ... on the back of further gains for oil prices this week, while the weakness of sterling in the last couple of days is also helping," Michael Hewson, chief market analyst at CMC Markets, said.

Micro Focus International, the British firm buying Hewlett Packard Enterprise Co's software business, was the biggest faller, down 3.5 percent after UBS cut its rating on the stock to "neutral" from "buy" and lowered its target price to 2350 pence from 2420 pence.

"Notwithstanding H1's good results and a $400 million planned Return of Value, we see the upside for the shares as limited now. We see several risks in 2017," UBS analysts said.

"MCRO's cash flow, meanwhile, is likely to show the effects of significant legal and advisory fees related to the deal ahead of its closing, and restructuring commitments are likely to be a feature thereafter," they said in a note.

Miners came under pressure after prices of major industrial metals slipped on a stronger dollar, which generally makes commodities costlier for holders of other currencies.

Shares in Antofagasta, Anglo American and Glencore fell 1.3 percent to 2 percent, pushing the UK mining index 0.7 percent lower. (Reporting by Atul Prakash and Kit Rees; Editing by Alison Williams)

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