RTRS: FTSE rises 0.7% early on commodities, banks weigh
By Dominic Lau
LONDON, Nov 3 (Reuters) - Britain's leading share index rose for a fifth straight session, up 0.7 percent early on Monday, as gains in miners and energy stocks offset weakness in banks, led lower by Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) and Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz). By 0909 GMT, the FTSE 100 .FTSE was up 29.02 points at 4,406.36, after gaining 12.7 percent last week -- its strongest weak on record though last month it lost 10.7 percent overall.
Rio Tinto said it sees most of its projects in a strong position to weather any economic scenario, with its new ilmenite project on track to produce.
Energy stocks were also firmer, with BP (BP.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz), BG Group (BG.L: Quote, Profile, Research, Stock Buzz), Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) and Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) up between 0.3 and 5.2 percent.
Banks were the main drag on the index. Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) sank 7.1 percent, extending Friday's near 13 percent fall on concern that its $12 billion fundraising is more costly than cash on offer from the government. A price target cut from Merrill Lynch and UBS also weighed on the stock.
Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz), the British bank in the process of buying rival HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), lost 1.3 percent after it said its profit for the first nine months of the year fell sharply as a result of financial market turmoil and rising bad debts. [ID:nL3542383]
HBOS UP
HBOS climbed 3 percent, helped by a weekend report of a potential bid to rival that from Lloyds TSB. HBOS took a 5.2 billion pound hit on the value of its risky assets and bad loans for the first nine months of this year, up 2.7 billion pounds in the third quarter.
Within the banking sector, Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) and HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) dropped 2.4 and 3.6 percent, respectively.
"The market is still extremely nervous. You had four positive sessions in a horrific economic climate. I really don't see how it can move on," said David Buik, strategist at BGC Partners. "I wouldn't be all too surprised to see the market pause for reflection today."
"People are obviously waiting whether we are going to just get a half percent (rate cut) ... whether we are going to see some inspiration by cutting it by 1 percent to give borrowers some impetus."
The Bank of England and the European Central Bank are expected to cut interest rates this week, following last week's reductions from China, India, Japan and the United States.
The Times said three million homeowners, or more than a fifth of households, could end up in the trap of negative equity, with mortgage debts larger than the value of their property, as house prices continue to plunge, according to City Estimates showed.
