* 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 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
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
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.