* FTSE 100 up 0.3 pct to highest close since Nov. 7
* Banks lift index as leverage rules are eased
* Amec rallies after Foster Wheeler deal
By Francesco Canepa
LONDON, Jan 13 A rally in banking shares helped
Britain's FTSE 100 rise to a two-month closing high on
Monday as investors welcomed the prospect of lighter rules on
leverage for the sector.
Supermarket WM Morrison was the top FTSE gainer on
speculation it may sell some property and return some of the
proceeds to shareholders, while oil and gas engineering firm
Amec was boosted by an expansionary deal to buy rival
Banks rallied after regulators, seeking to keep the global
economy financed, watered down the rules for calculating how
much capital a bank must hold against its loans and other
"It's all about the banks. The relaxing of the regulations
is really improving investor sentiment in the sector," said
Jonathan Roy, a broker at London Stone Securities.
Banks added 9.2 points to the FTSE 100, which rose
17.21 points, or 0.3 percent, to 6,757.15 points, its highest
closing level since Nov. 7.
Barclays rose 2.9 percent, Royal Bank of Scotland
was up 3.1 percent and Lloyds up 1.2 percent.
WM Morrison rose 6.4 percent to the top of the FTSE after
media reports that, following weaker than expected Christmas
sales, the grocer was under pressure from investors to sell part
of its property portfolio, freeing up cash to return to
"(Property sales worth) 800 million pounds to 1 billion
pounds ($1.65 billion) could be a sensible amount," Graham
Jones, an analyst at Panmure Gordon & Co, said.
"Then they could do a (share) buyback to offset the earnings
dilution from a higher rental cost together with a special
Volume on Morrison's stock was five times its full-day
average for the past three months, compared to volume 5 percent
below the average for the FTSE.
AMEC was the second-top gainer, adding 2.4 percent to 1,105
pence, after it agreed to acquire Foster Wheeler, in a deal that
it expects will help more than double revenues in growing
markets such as Latin America and the Middle East.
Societe Generale described the acquisition as "highly value
accretive" and raised its target for Amec to 1,417 pence from
1,320 pence, confirming its "buy" recommendation.
Energy shares tracked crude prices lower as an
international deal on Iran's nuclear programme was seen as
potentially paving the way for a lifting of sanctions on the
country, bringing Iranian oil back onto the global market.
Defensive pharmaceutical and utilities shares also weighed
on the market as investors switched into sectors that offer
greater exposure to a nascent European economic recovery, such
as banks and auto parts.
The FTSE has risen roughly 4 percent in the past six months,
compared with an 11 percent increase for the pan-European
FTSEurofirst 300, due to the British index's higher
weightings in defensive sectors and in shares that depend on
commodity prices, which have mostly flatlined or fallen in
"We see more opportunities in continental Europe," Nick
Nelson, a strategist at UBS, said. "We've still got a (FTSE)
target of 7,400 for the year but we just think you're going to
see better performance when you look across the wider European