Oil and Gas

Oils, miners, banks drive FTSE back above 5,000

* Oils, miners boosted by firmer commodity prices

* Defensive issues, led by tobaccos retreat

* UK wholesale inflation numbers awaited

LONDON, Sept 11 (Reuters) - Britain’s top share index gained 0.5 percent in early deals on Friday, moving back above the 5,000 level, led by strength in heavyweight oils, miners and banks, supported by gains on Wall Street and in Asia.

By 0808 GMT, the FTSE 100 index .FTSE was 26.73 points higher at 5,014.41, having closed 16.62 points, or 0.3 percent lower on Thursday at 4,987.68.

The benchmark index closed above 5,000 for the first time since late September 2008 on Wednesday.

“The rally that few people understand has continued today and it would take a brave investor to bet against the current momentum,” said Arifa Sheikh-Usmani, equity trader at Spreadex.

The UK blue-chip index has risen about 44 percent since hitting a six-year trough in March, though is still down almost 8 percent from its level in mid-September 2008, before the collapse of Lehman Brothers.

“The FTSE seems to be trading pretty comfortably around the 5,000 level and the continued dollar weakness is giving it extra support as commodities push higher,” Sheikh-Usmani added.

Oil majors provided the main impetus for early blue-chip gains as crude prices CLc1 held above $72, with BP BP.L, Royal Dutch Shell RDSa.L, BG Group BG.L, Cairn Energy CNE.L, and Tullow Oil TLW.L up between 0.1 and 1.9 percent.

Miners were also higher after solid industrial output data from China boosted the outlook for demand for metals.

Antofagasta ANTO.L, Xstrata XTA.L, Rio Tinto RIO.L, BHP Billiton BLT.L, and Anglo American AAL.L gained 1.6 to 1.9 percent.

Banks were also higher as a sector, led by Lloyds Banking Group LLOY.L, up 2.1 percent as SG Securities assumed coverage of the bank with a "buy" rating and 160 pence target price.

Lloyds Banking Group’s Irish unit, Bank of Scotland (Ireland), wants to participate in a potential merger to create a “third force” in Irish banking, the Irish Times reported on Friday. [ID:nLB519059]

Royal Bank of Scotland RBS.L gained 0.9 percent with SG Securities assuming coverage of it with a "hold" rating and 55 pence target price, while Barclays BARC.L added 0.4 percent, but HSBC HSBA.L and Standard Chartered STAN.L lost 0.3 and 0.6 percent, respectively. Hedge fund manager Man Group EMG.L was the biggest FTSE 100 gainer, up 2.6 percent, boosted by an increase in equity valuations.

Insurer Prudential PRU.L took on 1.2 percent as the firm's Chief Executive-Elect, Tidjane Thiam, said it will look to Asia as a source of capital and could even seek to raise equity there, according to a Financial Times report. [nLA433371]


Tobacco stocks were the biggest blue-chip fallers early on, giving up some gains made on Thursday following positive broker comments, with British American Tobacco BATS.L and Imperial Tobacco IMT.L losing 0.7 and 0.1 percent, respectively. Other stocks perceived as defensive also retreated as investors' risk appetite returned.

Drugs firm GlaxoSmithKline GSK.L lost 0.3 percent, drinks group Diageo DGE.L shed 0.6 percent, food producer Associated British Foods ABF.L fell 0.3 percent, and mobile phones heavyweight Vodafone VOD.L slipped 0.2 percent lower.

On the economics front, UK wholesale inflation numbers are due for release at 0830 GMT.

Expectations are for PPI output to rise 0.1 percent on the month, following a 0.3 percent rise in July, giving a 0.5 percent year-on-year decrease, which would follow a 1.3 percent decline the previous month.

Later in the session investor attention will be drawn across the Atlantic, to the University of Michigan September consumer sentiment data, U.S. import/export prices for August, wholesale inventories/sales for July, and the Federal budget for August. (Editing by Rupert Winchester)