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Tullow outperforms as FTSE rises to near three-week highs

By Sudip Kar-Gupta

LONDON (Reuters) - The FTSE 100 rose to near three-week highs on Friday, with Tullow Oil outperforming after an oil find, although worries over Syria's civil war curbed the market's gains.

The blue-chip FTSE 100 index closed up by 0.2 percent, or 14.89 points, at 6,547.33 points.

Tullow Oil topped the FTSE leaderboard with a 3.6 percent gain after striking oil off the Norwegian coast.

In a volatile session, the FTSE at one stage dropped by as much as 0.6 percent after Bloomberg News said Russia would "assist" Syria in the case of an external attack. The index then pared those losses after Reuters reported Russia would "maintain current support" if Syria was attacked.

The United States has threatened military strikes against Syria over its alleged use of chemical weapons, and U.S. President Barack Obama and Russia's President Vladimir Putin failed to reach agreement over how to tackle the situation at the G20 political summit on Friday.

Another issue of uncertainty for investors is how soon the U.S. Federal Reserve may scale back economic stimulus measures that have driven much of this year's equities rally.

However, weaker-than-expected U.S. jobs data on Friday led investors to believe the Fed would not abruptly scale back its main stimulus measure - a bond-buying programme known as "quantitative easing" (QE) - this month which could help markets in the near term.

Richard Buxton, head of UK equities at Old Mutual Global Investors, said that even though the FTSE 100 could suffer an "autumnal shiver" due to tensions over Syria, he felt more confident in the longer term over the index's prospects.

Buxton advocated using days when the market fell to "buy on the dip" to add to equity positions, adding he felt the FTSE 100 could rise to 7,300 points by the end of 2014.

"Use volatility to buy equities," said Buxton.

Others were more cautious.

Hartmann Capital trader Basil Petrides backed using sessions when the FTSE 100 rose to sell stocks for a profit, arguing the market would lose ground in September.

Petrides felt the FTSE could fall to the 6,250-6,300 point area this month.

"I would be a seller of rallies at the moment. I still think September will be a corrective month," he said.

The FTSE 100 raced to a 13-year high of 6,875.62 points in late May before then slipping back, although the index remains up by 11 percent since the start of 2013.

(Additional reporting by Atul Prakash; Editing by Ruth Pitchford, Ron Askew)