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Banks, miners and BP drive FTSE higher

Published 04/01/2011, 08:11 AM
Updated 04/01/2011, 08:12 AM

* FTSE 100 up 0.9 percent

* Banks bounce after Ireland debt concerns fade

* Miners rally on China trade data

By Tricia Wright

LONDON, April 1 (Reuters) - Strong banks and miners helped push Britain's top share index higher on Friday, as investors said the market has further to run, while BP was lifted by upbeat broker comment.

By 1142 GMT, the FTSE 100 was up 55.19 points, or 0.9 percent, at 5,963.95. The index ended down 0.7 percent on Thursday following six straight sessions of gains.

The index has managed a slight advance on the year, having rallied about 6 percent in the past two weeks from its March low of 5,591.59 hit just after the Japanese earthquake.

Banks rebounded after a sharp sell-off in the auction period on Thursday when it was announced Ireland's remaining lenders needed to recapitalise to the tune of 24 billion euros ($34.11 billion), putting a 70-billion-euro total price on protecting its banks from future shocks.

Barclays topped the blue-chip leader board, up 4 percent.

Broker Nomura said: "With macro concerns weighing on trading revenues, we have trimmed investment bank forecasts, but believe much is in the price."

Observers said the way in which the index has bounced since the earthquake in Japan on March 11 provides cause for optimism.

"It goes to show that for all those people who were sitting on the sidelines waiting for things to get a bit cheaper, there are plenty of people still willing to go long the market," Angus Campbell, head of sales at Capital Spreads, said.

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"We're nearly back at the 6,000 level, so momentum still seems to be with the bulls, but we have to test the 2011 highs."

Investor morale, he said, is being helped by a number of economic releases indicating the global recovery is on track.

Data showing Chinese factories are growing modestly while cost inflation slowed followed reassuring U.S. private payrolls data earlier in the week.

And on the domestic macro front, while UK manufacturing PMI came in weaker than expected, this was offset by a survey this week by the Confederation of British Industry showing an unexpected rise in UK retail sales.

U.S. stock index futures pointed to a higher open on Wall Street on Friday ahead of an employment report expected to show that the economy continued to add jobs.

Buyers came in for the miners, helped by the Chinese data, while integrated oil stocks found favour, led by BP, up 1.9 percent on bullish comment from JPMorgan.

The broker put the oil major on its EMEA analyst focus list, saying it is "seriously undervalued" and has 26 percent upside.

Randgold Resources extended gains from the previous session when it issued an upbeat update, adding 3.2 percent.

On the downside, private equity group 3i Group fell 5.9 percent after it said a weak performance in the UK had offset strong growth in Northern Europe.

Technical analysis for the FTSE 100 remained positive in the mid-term (1-4 weeks).

"It looks like it's going to be reaching into the 6,117 area (and) if it holds that -- April tends to be a mixed month -- then you're probably looking towards 6,245 as a key level," Sandy Jadeja, chief technical analyst at City Index, said. (Additional reporting by David Brett; Editing by Hans Peters)

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