* Insurers bounce back; UK's Prudential up on results
* Defensives, notably drug stocks, cold-shouldered
By Farah Master
LONDON, March 19 (Reuters) - Britain's leading share index
rose more than 1 percent by midday on Thursday, buoyed by
Federal Reserve plans to buy bonds which boosted Wall Street
overnight and propelled gains in banks and heavyweight miners.
By 1125 GMT, the FTSE 100 index <> had risen by 43.66
points to 3,848.5 after closing 1.4 percent lower on Wednesday,
having snapped a six-session winning streak on Tuesday.
The U.S. central bank said it would buy up to $300 billion
worth of longer-term U.S. government debt over the next six
months and expand purchases of mortgage-related debt to help
ease credit market conditions in its latest initiative to lower
borrowing costs. []
"They (the Fed) are obviously using every tool available and
now they are embarking on a relatively high-risk strategy." said
David Scott a strategist at Redmayne-Bentley.
"Bearing in mind that yesterday was one of the first serious
selloffs we have seen in over a week and a half, it's inevitable
the market would bounce a bit."
Banks responded positively to the Fed action with the sector
showing large gains.
Lloyds Banking Group <LLOY.L> and Barclays <BARC.L> led
their peers, rising 22 percent and 14.5 percent respectively.
Heavyweight HSBC <HSBA.L> reversed earlier losses to trade
5.5 percent higher. The new shares created by HSBC's 12.5
billion pounds rights issue begin trading in London on Friday
and in Hong Kong on Monday.
Standard Chartered <STAN.L> and Royal Bank of Scotland
<RBS.L> respectively gained 8.6 and 8.2 percent.
RBS is selling its retail and commercial banking business in
Singapore but will keep its investment banking and wholesale
business, the Business Times quoted RBS's chairman as saying.
[]
Miners found support as copper prices hit 4-month highs on
optimism about the Fed's plans, with Rio Tinto <RIO.L>, BHP
Billiton <BLT.L>, Anglo-American <AAL.L> and Xstrata <XTA.L>
adding between 4.9 and 12.9 percent.
Gold miner Randgold Resources <RRS.L> was up 11.7 percent.
Oil majors rebounded from early falls, impacted by a Morgan
Stanley sector downgrade, after crude prices <CLc1> rebounded.
Royal Dutch Shell <RDSa.L>, BG Group <BG.L> and BP <BP.L> rose
between 0.7 and 1.7 percent.
INSURERS GAIN
UK insurer Prudential <PRU.L> was a strong riser, up 20
percent after it reported an above-forecast 17 percent rise in
annual profit, boosted by growth in its Asia operations, and
announced the departure of Chief Executive Mark Tucker.
Other insurers recovered after falls on Wednesday, with
Aviva <AV.L>, Friends Provident <FP.L>, Legal & General <LGEN.L>
and Old Mutual <OML.L> up between 5.9 and 18.3 percent.
Upbeat trading news lifted transport companies; FirstGroup
<FGP.L> added 16.6 percent, while tour operator Thomas Cook
Group <TCG.L>, gained 7.4 percent.
Pharmaceutical companies were the main drag on blue chip
sentiment as investors moved out of defensive sectors, with
GlaxoSmithKline <GSK.L>, AstraZeneca <AZN.L> and Shire <SHP.L>
down between 2.1 and 4.8 percent.
Defence and household stocks also fell, with BAE <BAES.L>
Systems down 2.9 percent and household products firm Unilever
<ULVR.L> 2.5 percent lower.
(Reporting by Farah Master; editing by John Stonestreet)
