FTSE up 1.2 pct as Intel lifts sentiment

 

Britain's top share index gained 1.3 percent early on Wednesday as forecast-beating results from Intel Corp fuelled optimism on the demand outlook, boosting commodity stocks and banks.

By 0812 GMT the FTSE 100 was 62.86 points higher at 5,216.72, not far from a more than 12-month high of 5,231.19 set on Monday, after closing 1.1 percent weaker on Tuesday.

Intel's quarterly outlook and results soared past expectations on Tuesday, sending its shares 7 percent higher and lifting hopes that the corporate results season would provide more evidence that the global economy is recovering fast.

Miners led the FTSE 100 index higher, tracking stronger metal prices which were bolstered by a weaker dollar as well as an improved demand outlook. Gold, which has gained over 13 percent since September, hit a fresh record high.

Rio Tinto added 3.5 percent after it raised its production guidance for iron ore this year by between 5 and 7.5 percent to 210-215 million tonnes, after reporting a 12 percent jump in third-quarter output.

Xstrata, Lonmin, Anglo American, Kazakhmys and Fresnillo added 2.1-4.5 percent.

Energy stocks were also solidly higher as crude sailed beyond $75 per barrel, touching its highest in nearly 12 months. BG Group, BP, Royal Dutch Shell,BP and Cairn Energy added 1.5-3.3 percent.

Investors were awaiting earnings news from JP Morgan Chase, scheduled for release on Wednesday, with Citigroup and Goldman Sachs due to report on Thursday, and Bank of America and General Electric on Friday.

"The Q3 numbers are suggesting a decent reporting season andso long as banks meet expectations, it looks as though markets may get a shot in the arm" said Peter Dixon, economist at Commerzbank.

"But if they undershoot, we could get the much-feared equity wobble that we've been worried about for the last few weeks."

BANKS BOOSTED

Ahead of the results from their peers, UK banks were also firmer, benefiting from a broadly improved risk appetite.

Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking Group were up between 1.3 and 1.9 percent. 

Drug issues moved higher as well, with Glaxo SmithKline, Astra Zeneca, and Shire adding 0.9 to 1.9 percent.

A key U.S. Senate committee endorsed a sweeping healthcare overhaul on Tuesday, gaining the support of an influential Republican and delivering President Barack Obama a victory on his top domestic priority.

Among individual gainers, Burberry added 2.1 percent after it beat second-quarter revenue forecasts, helped by demand for handbags and leather goods.

Among a relatively short list of fallers, shares in International Power shed 2.5 percent, heading the FTSE100 fallers as Morgan Stanley cut the power firm's rating to"equal-weight" from "overweight" in a cautious review of European utilities.

Some defensive stocks also retreated as investors shunned safe-haven assets. Beverage companies Diageo and SAB Miller fell 0.7 and 0.1 percent respectively.

Ex-dividend factors knocked 1.54 points off the index, with British Land, Smith & Nephew and Tesco all losing their payout attractions.

Investors will eye the UK jobless report at 0830 GMT, with claimant count unemployment seen rising by 25,000 in September,after a 24,400 increase the previous month.

The ILO unemployment rate for June to August is seen movingup to 8.0 percent from 7.9 percent in May to July.

After the JP Morgan results, due around 1100 GMT, the focus will shift to U.S. September retail sales, scheduled for release at 1230 GMT, and publication of the minutes of the Sept. 22-23 FOMC meeting, due out at 1800 GMT.