* FTSE hits fresh 12-month highs
* Banks, commodity stocks in demand as risk appetite returns
* Broker upgrades lift airlines
By Tricia Wright
LONDON, Sept 17 (Reuters) - Banks and commodity stocks
helped lift the FTSE 100 <> 0.7 percent by midday on
Thursday, taking its rally into a fifth straight session on
global economic recovery hopes.
At 1122 GMT the FTSE 100 was up 36.86 points at 5,160.99,
having added 1.6 percent on Wednesday to end the session at
5,124.13 -- the highest close since late September last year.
"Obviously markets can't continue to go up in a completely
straight line -- one would expect a correction at some point,
said Richard Hunter, head of UK equities at Hargreaves Lansdown.
"But for the moment, whilst the big question mark remains
about how sustainable or strong any economic recovery might be,
the market's very much in an optimistic mood," he said.
The FTSE 100 has gained 21.5 percent this quarter and is on
track to post its best percentage quarterly gains since the
index was launched in 1984, but it is still down 4.6 percent
from a year ago, just before the collapse of Lehman Brothers.
Banks added the most points to the blue-chip index,
extending Wednesday's gains as growing investor confidence in a
global economic recovery bolstered their appetite for risk.
Heavyweight HSBC <HSBA.L> added 1.3 percent, while Barclays
<BARC.L>, Lloyds Banking Group <LLOY.L>, Royal Bank of Scotland
<RBS.L> and Standard Chartered <STAN.L> rose 0.5-1.4 percent.
Energy stocks were in demand as crude prices <CLc1> held
steady above $72 a barrel, taking a breather after a rise of
more than 2 percent a day earlier, with BP <BP.L> and Royal
Dutch Shell <RDSa.L> adding 1.1 and 0.9 percent, respectively.
Tullow Oil <TLW.L> climbed 4.5 percent after the oil
explorer says it has struck what may turn out to be the largest
oil find in Uganda, prompting brokers to upgrade ratings and
target prices for the company. []
Against a backdrop of broadly firmer metals prices, miners
also rose, with gold prices hitting 18-month highs for a second
consecutive session <XAU=>.
Randgold Resources <RRS.L>, Fresnillo <FRES.L>, Rio Tinto
<RIO.L> and BHP Billiton <BLT.L> gained 1.3-3.8 percent.
Broker upgrades also lent support, with Antofagasta <ANTO.L>
up 3 percent as Cazenove upped its rating on the stock to
"outperform" and Anglo American <AAL.L> adding 1.3 percent as
Barclays Capital hiked its rating on the firm to "overweight".
Eurasian Natural Resources <ENRC.L> bucked the sector trend,
shedding 0.5 percent after the Kazakh mining group confirmed
late on Wednesday that it was mulling over a cash bid for CAMEC
<CFM.L>. []
AIRLINES CLIMB
British Airways <BAY.L> topped the blue-chip leaderboard, up
5.8 percent as Goldman Sachs added the stock to its pan-European
"conviction buy list" and raised the airline's price target.
[]
BA is interested in UK rival bmi and has spoken with bmi's
German owner Lufthansa <LHAG.DE>, the UK flag carrier's chief
executive Willie Walsh told the Evening Standard. []
Discount airline easyJet <EZJ.L>, meanwhile, was the biggest
FTSE 250 <> riser, up 6.1 percent after a Morgan Stanley
upgrade to "overweight" from "equal-weight".
Kingfisher <KGF.L>, Europe's biggest home improvements
retailer, added 1.7 percent after posting a 35 percent rise in
first-half profit, joining a growing list of store groups to
defy analysts' fears while also warning of a slow recovery.
[]
British retail sales were flat on the month in August
against expectations for a small rise, with clothing sales
exerting the biggest downward impact, official data showed on
Thursday. []
Balfour Beatty <BALF.L> gained 1.7 percent after the
construction company confirmed it was in advanced talks
regarding a "significant" acquisition and was mulling over a
rights issue to fund a deal.
Later today, investor attention will be drawn across the
Atlantic to U.S. housing starts and weekly jobless claims.
(Editing by David Cowell)
