By Dominic Lau
LONDON, Feb 25 (Reuters) - Britain's top share index rose
1.7 percent by mid-session on Monday as merger and acquisition
talk helped fuel a rally in beaten-down banks, while firmer
crude prices lifted oil shares.
At 1148 GMT, the FTSE 100 <> was up 97 points at
5,985.5, also buoyed by hopes for a rescue package for bond
insurer Ambac Financial <ABK.N> that would limit damage from a
credit crisis.
The UK benchmark index advanced 1.7 percent last week, but
it is still down 7.3 percent for the year on concerns over the
U.S. economy.
"Overnight we had some positive news on Ambac - the fact
that certainly one of the largest monolines could be
underwritten by a consortium of banks," said Richard Hunter,
head of UK equities at Hargreaves Lansdown.
"That's taken very positively because the market is looking
for signs perhaps some of the corners have been turned."
European shares also traded higher by midday.
Banks were big gainers, contributing nearly 38 points to the
index, on the bond insurer news and as Qatar's $60 billion
sovereign wealth fund eyed investing in European banks.
Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani said
in an interview that he favoured investing in European over U.S.
lenders because U.S. bank stocks were likely to fall further on
subprime-mortgage writedowns. []
Royal Bank of Scotland <RBS.L> advanced 7.5 percent after
the Sunday Telegraph said the Qatari government was considering
making an investment in Britain's second biggest bank and on
hope that the bank would lift its dividend and post strong
results this week. RBS was not immediately available for
comment.
"There are some hopes that we could see some robust figures
from RBS later in the week. Obviously we just hope there won't
be any loose cannons in terms of the others that are reporting,"
Hunter said.
Also in the sector, Alliance & Leicester <ALLL.L> rose 8.1
percent with Bradford & Bingley <BB.L> up 7.8 percent, after
comments by rival Lloyds TSB <LLOY.L> stoked speculation they
could become takeover targets. Lloyds, whose shares gained 3
percent, declined to comment on talk it could be interested in
either of its UK peers.
Barclays <BARC.L>, HSBC <HSBA.L> and Standard Chartered
<STAN.L> were up between 2.4 and 4.2 percent.
OIL SHARES PUMP HIGHER
Oil major BP <BP.L> tacked on 2.1 percent, while Royal Dutch
Shell <RDSa.L> added 1.2 percent and gas producer BG <BG.L>
advanced 1.3 percent.
Miners also were mostly stronger. BHP Billiton <BLT.L>, Rio
Tinto <RIO.L>, Anglo American <AAL.L>, Xstrata <XTA.L> and
Kazakhmys <KAZ.L> were up but Antofagasta <ANTO.L> and Lonmin
<LMI.L> slipped.
Hammerson <HMSO.L> climbed 6 percent after posting a strong
3 percent rise in full-year adjusted net asset value, ahead of
market expectations.
Within the property sector, Land Securities <LAND.L> added
4.7 percent after weekend media reports that a number of private
equity firms were considering making a bid for its property
outsourcing arm Trillium.
But Associated British Foods <ABF.L> fell 2.5 percent to top
the losers' list on the FTSE 100 as trader cited concerns that
higher commodity prices would hurt its earnings.
(Editing by David Cowell)
