Banks help UK's FTSE recover from last week's lows

Mon Apr 22, 2013 7:05am EDT

* FTSE up 0.8 pct, recovering from 10-week lows last week

* Banks boosted by Italian political progress

* Randgold rises as Blackrock raises stake in firm

By Sudip Kar-Gupta

LONDON, April 22 (Reuters) - Britain's benchmark equity index rose on Monday to continue a tentative recovery after falling to 10-week lows last week, with signs of political progress in Italy boosting major bank stocks.

The blue-chip FTSE 100 index was up by 0.8 percent, or 47.48 points higher, at 6,334.07 points, with banks featuring prominently on the leaderboard.

Analysts said that Italy's decision to re-elect 87-year old Giorgio Napolitano as its president had helped remove some concerns over a political deadlock in the debt-ridden country, to which many UK banks have an exposure.

"The banks have been given a bit of a lift from Italy," said Darren Easton, director of trading at Logic Investments.

Easton added, however, that he was relatively cautious over the FTSE's near-term progress.

The FTSE 100 has risen 7 percent since the start of 2013, but has fallen 3 percent from a 2013 intraday peak of 6,533.99 points in mid-March, as uncertainty over the global economy has led investors to sell shares in order to book profits on the equity rally in the first three months of the year.

Easton said he would look to go "short" - namely bet on a market fall - if the FTSE hit 6,340-6,380 points.

"We would look to go short at those levels," he said.

RANDGOLD RECOVERS

Gold miner Randgold Resources was the biggest FTSE gainer with a 4 percent rise, which traders attributed to the fact that investment firm Blackrock had raised its stake in the company to 14.1 percent from around 14 percent previously.

"The Blackrock news has given it a shot in the arm," said Securequity sales trader Jawaid Afsar.

Mike McCudden, head of derivatives at Interactive Investor, said that further, sustained gains on the FTSE 100 would be hard to come by without an improvement in UK economic data, with Britain still at risk of falling back into a recession.

"Equities continue to be the only show in town with regards to investment options... but the underlying economy will provide a reality check, and I'm not enthusiastic that it's going to be able to support decent and sustainable moves higher," he said. (Additional reporting by Alistair Smout; editing by Keiron Henderson)

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