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* FTSE 100 up 0.2 pct
* GKN rises after confident full-year outlook
* BT Group up on Ofcom relief
* Housebuilders down on price target cuts
By Kit Rees
LONDON, July 26 (Reuters) - UK shares opened in positiveterritory on Tuesday, driven by gains in engineering firm GKN and BT, though UK housebuilders fell after aseries of price target cuts.
The blue chip FTSE 100 index was up 0.2 percent at6720.53 points by 0815 GMT, outperforming the broader Europeanmarket.
Engineering firm GKN was among the top risers, up 2.4percent after sticking to a forecast for 2016 to be another yearof growth.
It also said that it would aim to cut costs by 30 millionpounds ($39.32 million) to help boost next year's result.
"Staying on course and delivering on guidance (before FX)strikes us as pretty good going given the number of ebbs andflows across each division, although it is precisely what GKNhas done for at least the last three years," Sandy Morris,equity analyst at Jefferies said in a note.
"We believe 2016 will not - as GKN guided - be a vintageyear in terms of organic growth, but the things that need tohappen to position GKN for good organic growth from 2017 appearto be slotting into place."
Likewise telecoms company BT Group rose 4.2 percent afterBritish regulator Ofcom did not recommend breaking up thecompany.
Instead, Ofcome said that BT's network division Openreachshould be run as a separate company within the telecoms group.
"Avoidance of the worst-case outcome may be a relief forinvestors and the underperformance of the BT share price inrecent months may imply that concerns over governance atOpenreach may be at least partially priced in," Polo Tang, Headof Telecom Research at UBS, said in a note.
Housebuilders, however, were the biggest laggards, withTaylor Wimpey, Berkeley Group, BarrattDevelopments and Persimmon all down between 2.3percent to 2.5 percent after Deutsche Bank cut its price targeton all four stocks, citing Brexit uncertainty for a reduction intheir forecasts for the sector.
Shares in ITV also fell 2.6 percent after a targetprice cut from Kepler Cheuvreux.
Oil major BP was down 2.4 percent after missing itsquarterly profit expectations due to weak refining margins andoil prices.
The oil copmany also cut its 2016 investment budget to below$17 billion.
Outside of the blue chips, Virgin Money jumped over 6percent after reporting a rise in half-year underlying pretaxprofit. (Editing by Jeremy Gaunt.)
