AFP: FTSE rises at midday, miners offset bank losses
FTSE rises at midday, miners offset bank losses
Reuters, Monday November 3 2008
* FTSE 100 rises 0.6 percent
* Miners and oils track firmer raw material prices
* Banks fall, bleak outlook for sector
By Harpreet Bhal
LONDON, Nov 3 (Reuters) - Britain's leading share index had edged up by midday on Monday, sustained by gains in commodity stocks, while concern about Barclays' fundraising dented banking stocks.
Miners were among the top performers on the FTSE 100 as improved risk appetite boosted metal prices, while energy shares rallied as the price of crude oil rose modestly.
By 1205 GMT, the benchmark index rose 25.79 points to 4,402.66, on track for a fifth day of gains, its longest since December 2007.
The index gained 12.7 percent last week, its strongest week on record, fed by anticipation of a widely-expected interest rate cut from the Bank of England later this week, although it was down 10.7 percent in October.
Mike Lenhoff, chief strategist at Brewin Dolphin said the market has reacted positively to a spate of interest rate cuts in the United States, China, India and Japan, turning the spotlight to the BoE on Thursday.
"The underlying tone of the market has improved. There is an encouraging feel to what is going on," he said.
However, he said the outlook for the banking sector remained unfavourable as potential recession in Britain has prompted fears of further write-downs and bad debts.
Banks tempered gains on the broader market, as Barclays dropped 4.9 percent on concern that its $12 billion capital fundraising is too expensive. Analysts at Merril Lynch estimated the fundraising may cost investors 3.2 billion pounds.
Lloyds TSB, the British bank in the process of buying rival HBOS, lost 0.7 percent after it said its profits for the first nine months of the year fell sharply as a result of financial market turmoil and rising bad debts.
HBOS climbed 4.3 percent after the Sunday Times newspaper said Lloyds TSB could face competition for its bid from HBOS's Internet banking unit.
HBSC and Royal Bank of Scotland fell 2.9 and 1.4 percent respectively, while Standard Chartered advanced 3.2 percent.
Among other decliners were index-heavyweights Vodafone and supermarket group Tesco. Tesco fell 3.7 percent, while Vodafone shed 4.3 percent.
Helping keep the FTSE 100 in positive territory were the commodity stocks as a weaker dollar supported base and precious metal prices, while crude oil futures turned positive.
Kazakhmys surged 13.3 percent, lifted by rising copper prices. Xstrata, Vedanta Resources, Lonmin and Eurasian added between 6.5 and 7.9 percent. Rio Tinto added 1.9 percent, after the company said its new ilmenite project is on track to produce and the company sees most of its projects in a strong position to weather any economic scenario.
Energy firms also recorded gains, with BP and Royal Dutch Shell up between 0.8 and 1.6 percent, while Cairn Energy gained 7 percent. (Editing by Hans Peters)
