FTSE boosted by strength in oils, banks

Mon 29 Jun, 2009 16:00

By Jon Hopkins

LONDON (Reuters) - The top share index gained 1.3 percent on Monday boosted by strength in oil majors and banks, and reflecting early gains on Wall Street.

At the close, the FTSE 100 (UKX.L) was 53.02 points higher at 4,294.03, recovering most of last week's 1.5 percent decline.

"What is most impressive about today's rally is the breadth of the buying. Most sectors are on the advance with banks and energy firms leading the way," said David Evans, market analyst at BetOnMarkets.com.

Strength in oil majors provided the main support for the FTSE 100 index as crude prices pushed above $71. BP , Royal Dutch Shell , BG Group , Tullow Oil (TLW.L), and Cairn Energy (CNE.L) gained 1.0-4.1 percent.

BG was also aided by positive comment from Cazenove, with the broker pointing out that buying the stock below 1,000 pence -- a level it was at before Monday's rise -- has generated subsequent market outperformance.

Energy shares also provided the fuel for Wall Street's gains, with the Dow <.DJI> up 0.9 percent by London's close.

Lloyds Banking Group (LLOY.L) was the biggest individual British blue chip gainer, adding 6.1 percent, lifted by a Goldman Sachs upgrade to "buy" from "neutral" in a sector review.

Other banks moved higher too, with Barclays (BARC.L), Royal Bank of Scotland (RBS.L), HSBC (HSBA.L), and Standard Chartered (STAN.L) rose 0.3-4.3 percent.

Financial service companies are more optimistic than at any time in the past two years, although banks remain downbeat about their prospects, the Confederation of British Industry and accountants PricewaterhouseCoopers said on Monday.

Insurers found support, with Prudential , Aviva , and Standard Life up 1.4-5.9 percent.

Privately-owned life insurer Pearl Group said on Monday it planned to float on the London Stock Exchange and seek acquisitions.

Motor insurer Admiral Group , meanwhile, gained 3.2 percent after Credit Suisse raised its rating to "outperform" from "neutral" citing dividend attractions and valuation.

Miners were higher, supported by strength in metal prices, with Rio Tinto (RIO.L), Eurasian Natural Resources (ENRC.L), Kazakhmys (KAZ.L), and Anglo American (AAL.L) up 0.5-4.5 percent.

But Xstrata (XTA.L) was a faller, down 2 percent. Anglo American is building its defences against a 41 billion pound potential takeover from Xstrata by planning talks about a major Chinese investment, The Sunday Telegraph reported.

VODAFONE ENGAGING

Market heavyweight Vodafone (VOD.L) added strength to the blue chips, gaining 1.2 percent as investors responded to reports the company was considering a bid for T-mobile UK.

However Deutsche Telekom , owner of T-Mobile said it was not about to decide whether to sell the unit.

Other defensive stocks were cold-shouldered as risk appetite returned to the market, with drugs, tobaccos, food producers, and utilities the worst off.

GlaxoSmithKline (GSK.L) shed 1.1 percent, AB Foods (ABF.L) lost 0.9 percent, Imperial Tobacco (IMT.L) and Centrica (CNA.L) both fell 0.4 percent.

Tour operator Thomas Cook Group (TCG.L) lost 1.9 percent on continuing worries over the future of its majority shareholder, Arcandor , with a decision on state-aid for the German retail to holidays firm due on Tuesday.

Among midcaps , National Express (NEX.L) added 9.8 percent after news the train and bus operator had rejected an unsolicited takeover bid from rival FirstGroup (FGP.L). FirstGroup (FGP.L) fell 1.3 percent.

(Editing by Dan Lalor)