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FTSE rises 0.9% early on on banks, commodities

Published 04/24/2009, 03:34 AM
Updated 11/25/2008, 07:58 AM

* Commodity stocks and banks gains on stronger Wall St

* Preliminary UK GDP data, March retail sales at 0830 GMT

By Dominic Lau

LONDON, April 24 (Reuters) - Britain's leading share index rose 0.9 percent in early trade on Friday, driven by commodity stocks and banks, drawing comfort from gains on Wall Street.

By 0721 GMT, the FTSE 100 was up 33.96 points at 4,052.19, after losing 0.3 percent on Thursday. The UK index is down 8.6 percent this year after sliding more than 31 percent in 2008.

Banks gained, boosted by better-than-expected results from several U.S. regional banks.

Barclays, Royal Bank of Scotland, Lloyds Banking Group, HSBC and Standard Chartered strengthened between 0.6 and 3.2 percent.

A price target hike from UBS also added to gains in Lloyds.

"The cyclical stocks will continue to benefit from less weak economic conditions than people feared," said Darren Winder, equity strategist at Cazenove.

"The defensive stocks are also attractive (after recent falls), so the market should get more breath. If it gets more breath it will help its advance."

U.S. stocks rose on Thursday as earnings from big U.S. regional banks, including PNC Financial Services Group Inc and Fifth Third Bancorp, provided glimmers of hope for a sector damaged by rising loan losses as the recession persists.

U.S. Treasury Secretary Timothy Geithner, writing in the Financial Times ahead of the meetings of G7 and G20 officials in Washington later in the day, said there were signs of improvement in global markets and the world economy but that the 2009 outlook remained challenging.

Investors, however, wrestled with the possibility that Washington's stress tests on 19 major U.S. banks may reveal weaknesses. The U.S. government is set to unveil the results on May 4.

Preliminary UK first-quarter GDP number and March retail sales figures, both due at 0830 GMT, will provide a further gauge of the state of the British economy.

Sterling fell on Friday, shedding around 1 percent to hit a two-week low against the euro, with traders citing an article in the Daily Telegraph newspaper flagging risks to Britain's sovereign credit rating.

The article came two days after finance minister Alistair Darling unveiled massive increases in official borrowing and budget deficit forecasts, and the UK's Debt Management Office said gilt issuance would swell to 220 billion pounds this financial year.

COMMODITIES GAIN

Oil producers added the most points to the index as crude traded above $49 a barrel. BP, Royal Dutch Shell, BG Group, Cairn Energy and Tullow Oil were up 0.5 to 2.4 percent.

Miners were firmer, with Kazakhmys, Vedanta Resources, Anglo American, Xstrata, Antofagasta and Rio Tinto adding between 0.6 and 4 percent.

Amlin put on 1.8 percent after Goldman Sachs upgraded the Lloyd's of London insurer to "neutral" from "sell" and removed it from its "conviction sell list".

BAE Systems advanced 1.5 percent after UBS added the defence contractor to its "most preferred alpha preference list", saying it offered high visibility of earnings growth, strong cash generation and a very attractive valuation.

Schroders lost 1.6 percent, extending the previous session's 6.9 percent fall after its first-quarter results. Morgan Stanley on Friday cut its price target on the asset manager.

(Editing by Simon Jessop)

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