* FTSE 100 up 79.33 points at 6,650.28
* U.S. GDP accelerates to revive flat lining FTSE
* Heavyweight banks and energy stocks lead charge
* Investors toast Diageo as profits rise
By David Brett
LONDON, July 31 Approaching the close, the FTSE
100 was trading near intraday highs as the quickening pace of
the global economy's heartbeat revived confidence that economic
recovery can be sustained even if stimulus is withdrawn.
Economic growth in the world's largest economy, the U.S.,
unexpectedly accelerated in the second quarter, with gross
domestic product growing at a 1.7 percent annual rate, stepping
up from the first-quarter's downwardly revised 1.1 percent
"It is not a barn-storming reading by any stretch of the
imagination, but shows further momentum in the world's biggest
economy," Marcus Bullus, trading director at MB Capital, said.
"However GDP is measured, such a strong number sent an
instant buy signal to the markets," he said.
Heavyweight stocks led the charge on London's blue chip
index, which was up 79.33 points or 1.2 percent at
6,650.28, by 1446 GMT, near the session high of 6,659.35 and
lifted out of the 90-point range it had been stuck in since July
Europe's biggest bank HSBC added 11 points to the
index with traders citing a switch out of more UK-focused banks
following Barclays' six billion pounds cash call on
Energy shares, which are acutely exposed to the fortunes of
the broader economy, contributed 15 points to the index's gains,
with oil major BP up 1.2 percent boosted by upbeat
comment from BofA Merrill Lynch and JP Morgan post results.
Although the economic recovery in Europe and the UK is
still lagging, there have been signs of life in the data in
recent weeks, which has given some fund managers more
"This is a theme we have been playing in portfolios since
the beginning of this year; adding companies which have high
exposure to Europe and should benefit from any improvement in
GDP growth," Andrew Arbuthnott, head of European large cap
equities at Pioneer Investments, said.
"Q2 earnings to date have been lacklustre at best but we
believe the market is really looking through these numbers and
expecting an improvement in quarters to come," he said.
Although only a small sample size, 75 percent of UK-listed
companies have either beaten or met expectations in the current
quarter, compared with just 52 percent of European companies.
Diageo rose 3 percent after posting an 8 percent
rise in annual operating profit.
Oil explorer Tullow climbed 1.7 percent after a
successful drill at its Etuko-1 well in Kenya. [ID:nL6N0G11XB
Centrica added 1.6 percent after reporting higher
first half earnings.
Trade, however, could get choppy and the Fed's post-policy
meeting announcement late on Wednesday could derail the rally.
"I am now selling on the bounces," Ed Woolfitt, head of
trading at Galvan, said. "Technically, it feels a correction is
(Reporting by David Brett; editing by Ron Askew)