Miners lead FTSE up 0.9 pct ahead of BoE rate vote

Britain's leading shares gained 0.9 percent early on Thursday led by strength in commodity and banking issues after Alcoa kicked off the U.S.third-quarter earnings season with a bang.

At 0829 GMT the FTSE 100 was up 45.12 points at5,154.02, with the market having paused for breath on Wednesday, closing down 29.08 points, or 0.6 percent.

The blue-chip index has risen 49 percent since hitting a floor in March helped by continuing signs of a recovery in the economy, but is still down 4.7 percent from the level prior tothe collapse of Lehman Brothers last year.

Simon Schaffer, a trader at Shore Capital, said there was still plenty of cash waiting on the sidelines as investors holdon for other key earnings figures from the United States next week, which could see the FTSE push higher. 

"The financials are reporting next week and they are theones that can really affect this market. It feels like there is more room to move up and investors are looking for a reason to breakout of this tight trading range" he said.

Miners were strongly in favour with metal prices soaring as the dollar weakened and the demand outlook continued to improve set a fresh record high above $1,050 an ounce.

Indian-focused mining group Vedanta Resources was the top-blue chip gainer, up 5.6 percent after posting a 15.6 percent rise in second-quarter output of refined zinc and a 27.3 percent increase in iron ore, its two most important minerals.

BHP Billiton, Lonmin, Fresnillo, Xstrata, Kazakhmys and Rio Tinto added 2.4-3.9 percent.

Banks also saw good demand. HSBC rose 1.0 percent, underpinned by news it has resumed talks with Royal Bank of Scotland over the purchase of the remaining retail andcommercial units that bailed-out RBS owns in Asia, sources said on Thursday.

Standard Chartered and Barclays added 2.1 and 0.9 percent respectively.

But Lloyds Banking Group missed out, shedding 1.3 percent. The Financial Times reported the part-nationalised lender was sounding out investors about a 15 billion pound ($24billion) rights issue to help it avoid a government scheme to insure against credit losses.

RATE DECISIONS AWAITED 

The Bank of England's monetary policy decision was due at 1100 GMT although no change was expected to interest rates orthe central bank's current quantitative easing policy.

The European Central Bank was also set to deliver its interest rate verdict at 1145 GMT, with no change expected from the ECB council.

Oil majors bounced back from profit-taking in the previous session, with the crude price holding above $70. Royal Dutch Shell, BP, BG Group, Cairn Energy and Tullow Oil were up 0.4-2.5 percent.

Pharmaceuticals GlaxoSmithKline and AstraZeneca rose 0.4 percent and 0.3 percent respectively, boostedby a report by a leading tracker of prescription drug data, which showed global pharmaceutical sales were proving more resistant than expected to the economic slowdown.

But peer Shire failed to join the rally, falling 0.9 percent following a recent spate of negative broker comment.