FTSE closes up 0.4 percent

 

The top share index rose on Wednesday as gains from financial stocks, boosted by strong numbers from the British arm of Spain's Banco Santander and positive broker comment, outweighed a weak mining sector.

The FTSE 100 closed 18.69 points, or 0.4 percent, higher at 4,547.53, after ending 1.3 percent lower on Tuesday when it failed to break records with a 12th session of gains.

The market "just seems to be hanging in there and it reflects the growing conviction that there is a recovery out there, that the global economy is going to be reflated, which is what the central banks and the policymakers have been attempting to do" said Mike Lenhoff, chief strategist at Brewin Dolphin.

The index has gained over 31 percent since hitting a six-year low in March, but is still down 2.6 percent this year.

Banks were the best performing sector after the British arm of Santander, which includes Abbey, said profits rose by a third in the first half of the year as bad debts showed a second consecutive quarterly decline.

HSBC , Lloyds Banking Group , Royal Bank of Scotland and Standard Chartered rose between 0.7 and 3.6 percent.

Life insurers were also higher. Aviva gained 3.3 percent after Deutsche Bank lifted its rating on the stock to "buy" in a review of the UK sector which saw possible consolidation on the horizon.

Prudential , Standard Life , Old Mutual and Legal & General added 1.5-3.9 percent. 

Asset management firm Schroders rose 4.6 percent, after Morgan Stanley raised its rating on the stock to "overweight" from "underweight" and upped its price target.

Energy stocks were mixed as crude prices fell below $64 a barrel after an unexpected rise in U.S. crude inventories threw the focus on weak demand.

BP, after losing 3.1 percent on Tuesday following its mixed results, added 0.2 percent, while Royal Dutch Shell put on 0.5 percent ahead of its second-quarter numbers due Thursday.

BG Group fell 2.7 percent after it posted a 31 percent drop in its second-quarter profits and said lower gas demand meant it would not meet its 2009 production target.

MINERS WEIGH

Weak metals prices weighed on the mining sector, the biggest drag on the FTSE 100 index, with Anglo American, Antofagasta, Fresnillo and Rio Tinto down between 0.7 and 4.4 percent.

BHP Billiton fell 2.4 percent. The miner has agreed with unnamed customers to take a 33-44 percent price cut for contracted iron ore shipments, covering 23 percent of its total sales volumes.

Pharmaceuticals relinquished some of the gains made on Tuesday, with AstraZeneca off 1 percent ahead of second-quarter results on Thursday and GlaxoSmithKline 0.1 percent weaker.

Drinks can maker Rexam was the top blue chip faller, down 8.1 percent after the group confirmed a 334.3 million pound rights issue but still traded above its theoretical rights price as it reported better-than-expected results.

The market shrugged off figures released by the Bank of England showing weaker-than-expected consumer credit data, as news that mortgage approvals hit their highest since April 2008 boosted sentiment.