* FTSE 100 climbs 2.8 pct
* $586 bln package from China lifts metals prices
* Energy firms, miners rally
By Harpreet Bhal
LONDON, Nov 10 (Reuters) - Britain's leading share index
climbed 2.8 percent by midday on Monday, as energy and mining
stocks rallied after China's almost $600 billion stimulus
package lifted hopes of demand for commodities.
By 1157 GMT, the benchmark FTSE 100 <> rose 133.89
points to 4499.16.
Metal prices turned positive after China approved 4 trillion
yuan ($586 billion) in new government spending, and the G20
group of nations pledged to take all necessary steps to put
financial markets back on their feet.
Miners dominated the gainers' list on the FTSE 100. Anglo
American <AAL.L> climbed 17.3 percent and Xstrata <XTA.L> gained
15.6 percent, while Rio Tinto <RIO.L> and BHP Billiton surged
14.9 and 13.9 percent respectively. Kazakhmys <KAZ.L>, Lonmin
<LMI.L> and Vedanta Resources <VED.L> gained between 8.7 and
10.3 percent.
Energy firms were also in positive territory, lifted by
firmer oil prices <CLc1> and Saudi Arabia's pledge to cut supply
in December by 5 percent. BG Group <BG.L>, BP <BP.L>, Cairn
Energy <CNE.L> and Royal Dutch Shell <RDSa.L> advanced between
2.9 and 4.8 percent.
British factory costs fell by a record 5.6 percent in
October on falling oil prices. The figures are likely to boost
expectations that headline inflation could fall from its current
5.2 percent in the coming months to below the Bank of England's
2 percent target.
Edward Menashy, Chief Economist at Charles Stanley said
declining prices could see interest rates in Britain falling to
1.5 percent in 2009.
"It has not come as a surprise to see wholesale prices
starting to decline. If U.S. rates can be justified at 1 percent
then our rate has some way to go," he said.
AstraZeneca <AZN.L> gained 4.1 percent after a study showed
its cholesterol drug Crestor reduced deaths, heart attacks,
strokes and artery-clearing procedures in apparently healthy
patients and could prompt change to preventative care
guidelines.
Shire <SHP.L> and GlaxoSmithKline <GSK.L> advanced 1.3 and
1.9 percent, respectively.
Shares in telecommunications firm Cable & Wireless <CW.L>
gained 6.9 percent, after the company's underlying first-half
core earnings beat analysts' forecasts and it raised its
full-year outlook.
RECESSION WOES
Real estate firms were weak, on a grim outlook for the
British property sector and fears over a prolonged recession.
British Land <BLND.L>, Land Securities <LAND.L> and Liberty
International <LII.L> fell between 2.3 and 1.5 percent.
British retailers could face tough times ahead as a survey
by PriceWaterhouseCoopers suggests that Britain's high streets
could be ghost towns when the recession ends with one in five
stores having closed, the Times newspaper reported.
PwC estimates that 3,600 shops could be seeking new tenants
if 10 percent of retailers get into financial difficulty.
Retailers held up well on the FTSE 100, with Marks & Spencer
<MKS.L> and Next <NXT.L> adding 1.3 and 0.3 percent, while
supermarket Tesco <TSCO.L> fell 1 percent.
Banking stocks were mixed. Barclays <BARC.L> and HBOS
<HBOS.L> gained 3.4 and 6 percent, while HSBC <HSBA.L> fell 0.5
percent.
HSBC, Europe's biggest bank, said pretax profit in the nine
months to end of September was lower than a year ago, as bad
loans in the U.S climbed to $4.3 billion in the third quarter.
Royal Bank of Scotland <RBS.L> and Standard Chartered
<STAN.L> fell 2.9 and 3 percent, respectively.
(Editing by Erica Billingham)
