Fed's dovish words spark rebound on Britain's FTSE 100
* FTSE 100 up 65.51 points at 6,695.51
* Yellen says Fed needs to do more to aid economy
* Banks lead rally with miners, oils rebounding
* Sainsbury tops risers list as brokers upgrade
* Centrica falls after warning on earnings
By David Brett
LONDON, Nov 14 (Reuters) - Banks led a rebound among Britain's top shares early on Thursday after comments by the Federal Reserve's Janet Yellen dampened worries the U.S. central bank may start scaling back its stimulus programme this year.
Yellen, in remarks released ahead of her closely-watched Senate confirmation hearing as head of the Fed on Thursday, said the Fed had "more work to do" to help the economy, indicating she was in no hurry to start trimming its bond-buying programme, which has fuelled an equity rally this year.
"Yellen's comments have left traders interpreting this as a sign stimulus might not be cut as soon as previously thought," said Mark Ward, head of trading at Sanlam Securities.
"This will hopefully put the issue to bed now until the New Year, but the threat of comments from other central bankers still continues to linger in the minds of wary investors."
The FTSE 100 rose 65.51 points, or 1 percent, at 6,695.51, recovering many of Wednesday's sharp losses, which were sustained after strong data in Europe left investors in a quandary as to how much longer equities would remain supported by the ultra-loose monetary policy adopted by central banks.
UK lenders, which benefit most from the cheap liquidity currently on offer from central banks that helps drive down the cost of debt and keep the financial system afloat, contributed most to FTSE 100's gains, adding 11 points.
With appetite for risk boosted by the Fed's comments, cyclical stocks such as miners and oils also rallied and added a combined 20 points to the index's gains.
Consumer staples contributed 10 points to the index and were led higher by food retailer Sainsbury, which climbed 4 percent to the top of the FTSE 100 leaderboard as brokers raised recommendations and target prices across the board following results on Wednesday.
However, rival Tesco fell as Goldman Sachs became the latest bank to cut its recommendation on Britain's largest retailer to "sell" from "neutral" as worries remain over its UK strategy.
Goldman estimated Tesco store sales have lost 100 basis points of grocery market share since 2010. Its UK margins will be driven lower by pressure from online and discount channels, it said, adding that investors still have some time to wait before a cash return programme can be instigated.
No such problems confront British luxury brand Burberry , which rallied 2.3 percent after first-half sales exceeded 1 billion pounds ($1.6 billion) for the first time.
British Gas-owner Centrica, one of Britain's big six utilities under fire from politicians for hiking bills, fell 3 percent, topping the list of FTSE fallers and dragging the utilities sector lower after it warned that earnings would not grow this year.
Drinks can maker Rexam fell too, down 1.8 percent after it warned on the outlook for trading in Europe where it generates more than 23 percent of its revenues, according to Thomson Reuters data.
Earnings remain a concern for investors in Europe. Despite equities re-rating above long term averages, profits and revenues continue to disappoint.
Fifty percent of firms in Europe have missed analysts' earnings forecasts in Q3 so far, while 63 percent have missed sales estimates, heaping more pressure on margins.
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