RTRS:FTSE 100 boosted by rallying banks and commodities
(Reuters) - A rally by heavyweight banks and commodity issues pulled the top share index higher at midday Wednesday in thin volumes, as investors searched for bargains among beaten-down sectors.
The FTSE 100 .FTSE index was up 97.00 points, or 1.9 percent at 5,253.84 at 11:48 a.m., adding to Tuesday's 1.1 percent rally. It shed nearly 6 percent in the previous two sessions.
"Based on the short-term range of 5,449.70 to 5,097.70, traders should watch for a retracement back to 5,273.70 to 5,315.24," said James A. Hyerczyk, analyst at Autochartist.
"Breaking through and re-establishing support above this level will be a sign of strength. Fresh selling in this zone will likely mean the market is headed for a retest of the recent low. At this time it is too early to tell whether buyers are supporting the market or shorts are covering," Hyerczyk said.
Rallying banks provided support for the blue chips, led by Lloyds Banking Group (LLOY.L) up 4.9 percent, as worries over euro zone sovereign debt exposure eased slightly.
Germany's Constitutional Court rejected a series of lawsuits aimed at blocking Germany's participation in bailout packages for Greece and other euro zone countries.
The country's highest court said the government must seek the approval of parliament's budget committee before granting such aid, a requirement which could further slow Europe's response to the debt crisis.
"The decision highlights the legal restrictions imposed on (German Chancellor Angela) Merkel's coalition in trying to solve the problems of the Eurobloc," said Louise Cooper, Markets analyst at BGC Partners.
Integrated oils were the top blue-chip sector performers, lifted by a 1 percent rise in the crude price on a brighter demand picture after U.S. non-manufacturing ISM report showed an unexpected acceleration.
BP (BP.L) added 2.9 percent helped by news its partner Chevron (CVX.N) has made a deepwater discovery in the Gulf of Mexico at the Moccasin prospect in which BP has a 43.75 percent stake.
Miners also lent their strength to the FTSE 100, lifted by stronger base metal prices, with Chilean copper miner Antofagasta (ANTO.L) adding 3.3 percent.
RANDGOLD LUSTRE LOST
Precious metals miner Randgold Resources (RRS.L) 1.4 percent, retreating in line with a drop in the spot gold price.
Imperial Tobacco (IMT.L) shed 0.8 percent, having been a strong gainer Tuesday, with Goldman Sachs downgrading its rating to "neutral" in a review of European consumer goods.
Ex-dividend factors accounted for most of the other blue chip fallers, with Rexam (REX.L), Hargreaves Lansdown HL.L, and Diageo (DGE.L) among a dozen FTSE 100 stocks trading without payout attractions Wednesday.
British industrial production fell unexpectedly in July, Despite a modest increase in factory output, due to a drop in oil and gas extraction.
U.S. stock index futures,, pointed to a higher open on Wall Street, with investors awaiting the latest Federal Reserve Beige book due at 7 p.m., after London closes.
Investors were also looking to a speech by U.S. President Barack Obama Thursday, in which he was expected to reveal plans for $300 billion in tax cuts and government spending as part of a job-creating package.
"I suspect his (Obama's) words will be more radical than the actual solutions put forward and that he will do just enough to be able to pass the buck back to Bernanke for the Fed meeting in a couple of weeks time," said David Miller, Partner at Cheviot Asset Management.
