RTRS: FTSE advances 1.9 pct, fuelled by rate cut hopes
By Harpreet Bhal
LONDON, Nov 4 (Reuters) - Britain's leading share index climbed at midday on Tuesday, lifted by energy firms and banks, as investor sentiment improved on the back of a widely anticipated interest rate cut by the Bank of England this week.
By 1148 GMT, the benchmark FTSE 100 .FTSE climbed 1.9 percent, or 82.19 points to 4,525.05, after slipping into the red in early trade. The index recorded its fifth straight day of gains on Monday, the longest rally since December 2007.
BP (BP.L: Quote, Profile, Research, Stock Buzz), Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz), and Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) advanced between 2.3 and 3.5 percent, as investors searched for solid yields from oil majors and crude prices CLc1 traded near $65 a barrel, traders said.
BG Group (BG.L: Quote, Profile, Research, Stock Buzz) added 2.2 percent after the firm reported a 140 percent rise in third-quarter profit, beating analysts forecasts, but said it may delay a key project in Kazakhstan due to rising development costs.
Paul Kavanagh, head of market strategy at stockbrokers Killik said investors were positioning themselves ahead of the rate cuts despite the bad news about the economy.
"The market is prepared to absorb the bad news and focus on the good," he said.
The BoE is widely expected to cut rates by 50 basis points at a meeting on Thursday, to spur economic growth. The Reserve Bank of Australia cut rates by 75 basis points, following rate cuts in the United States, Japan and China last week.
Insurers rallied, led by Prudential's (PRU.L: Quote, Profile, Research, Stock Buzz) 8.1 percent gains. Legal & General (LGEN.L: Quote, Profile, Research, Stock Buzz) and Aviva (AV.L: Quote, Profile, Research, Stock Buzz) added 4.3 and 3.2 percent, respectively.
Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) advanced between 5.2 and 7.7 percent. Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) plunged 7.1 percent after the bank said it faces more write-downs of toxic debts this quarter and rising bad debts.
Marks and Spencer (MKS.L: Quote, Profile, Research, Stock Buzz) climbed nearly 10 percent, after the retailer posted a better-than-expected 34 percent drop in first-half profit in a rising consumer downturn.
SHRINKING CONSTRUCTION SECTOR
A further blow to the health of the British economy came from PMI data, which showed that the construction sector sank for the eighth consecutive month in October, its fastest pace since records began in 1997.
The Chartered Institute of Purchasing and Supply/Markit construction index fell to 35.1 last month from 38.8 in September, while housing construction recorded the sharpest decline.
But housebuilders were in demand, lifted by the rate cuts.
Taylor Wimpey (TW.L: Quote, Profile, Research, Stock Buzz) soared 18 percent, while Persimmon (PSN.L: Quote, Profile, Research, Stock Buzz), Barratt Developments (BDEV.L: Quote, Profile, Research, Stock Buzz) and Travis Perkins (TPK.L: Quote, Profile, Research, Stock Buzz) gained by between 3.9 and 10 percent. (Editing by Victoria Bryan)
