* FTSE up 1 percent
* Banks bounce, JP Morgan posts Q1 earnings
* GKN gains, some sector rotation seen on weak commods
By David Brett
LONDON, April 13 (Reuters) - Britain's FTSE 100 share index
extended gains on Wednesday, with banks among the top gainers
after results from U.S. investment banking giant JP Morgan
<JPM.N> beat expectations.
"There is the potential of a shift as to what drives the
market forward," David Battersby, an investment manager at
Redmayne-Bentley, said, adding the FTSE could see 7,000 by
end-2011.
"Money has been made so far in oil and gold as a hedge and
you could see these fall away as they've been pushed too far.
That could actually be to the manufacturers' benefit because the
cost to them will reduce and it will make them more attractive."
British industrial group GKN <GKN.L> added 3.7 percent,
recovering Tuesday's losses. The British plane and car parts
maker issued a strong first-quarter update on Monday.
By 1122 GMT, the FTSE 100 <> was up 62.05 points, or 1
percent at 6,026.52, having closed down 1.5 percent at 5,964.47
on Tuesday.
Banks <.FTNMX8350> were the top performing sector among
London's blue chip stocks as U.S. peer JPMorgan Chase & Co
<JPM.N> posted an increase in first quarter earnings.
Lloyds <LLOY.L> climbed 1 percent, having traded at nine
month lows and below its 20-day moving average, after the
Independent Commission on Banking (ICB) proposed the sale of
sale hundreds more of its branches.
"The ICB report published earlier this week has contributed
to underperformance in Lloyds shares versus its domestic peers,"
UBS said.
"With the shares trading at little more than historic
tangible book value, downside scenarios are now more than priced
in leaving the risk/reward firmly in investors favour."
COMMODS SUPPORT
Commodity stocks lent their support to the index, rebounding
after Goldman Sachs on Tuesday said the recent rise in commodity
prices had run its course, and concerns resurfaced over global
growth prospects being dented by Japan's earthquake.
Miners <.FTNMX1770> were higher, with Fresnillo <FRES.L> up
1.5 percent after the Mexican precious metals miner said it
would meet 2011 silver production targets, while Gold output
jumped. []
Global miner Rio Tinto <RIO.L> rallied 0.6 percent following
an intitial fall after a production update. []
"Rio's shares have run up very hard in recent weeks. They
have made up most of the ground lost in the aftermath of the
Japanese earthquake and may be due a pause," traders said.
"We would also highlight that if the Glencore IPO goes
ahead, it may sap demand from elsewhere in the mining sector."
Integrated oils <.FTNMX0530> rose with BP <BP.L> gaining 1
percent, shrugging off concerns over its share swap deal with
Russia's Rosneft <ROSN.MM>. []
Elsewhere, chip designer ARM Holdings <ARM.L> bounced 4.3
percent with traders citing a the impact of a bullish note from
Morgan Stanley.
Following a presentation by Microsoft in Las Vegas,
showcasing a version of Internet Explorer 10 running on an
ARM-based processor, traders said the broker was "positively
surprised that software development is already well advanced".
Reckitt Benckiser <RB.L> rose 2.7 percent after Bernstein
lifted its rating on the consumer goods group and JPMorgan
raised its earnings estimates, arguing the valuation is
compelling.
On the downside, insurer Old Mutual <OML.L> fell 2.4 percent
after going ex-dividend, but with the stock likely to remain
under pressure on technical grounds.
"The 14-day RSI has reached extremely overbought levels and,
at the same time, volumes have started to fall away, suggesting
that participation in the rally is diminishing," analysts at
Charles Stanley said.
Ex-dividend factors knocked 2.43 points off the FTSE 100
index on Wednesday, with Aggreko <AGGK.L>, BG Group <BG.L>,
Capita <CPI.L>, IMI <IMI.L>, Tullow Oil <TLW.L>, and John Wood
Group <WG.L> all trading without their payout attractions.
On the economic front in the UK there was surprise on the
upside as Britain's jobless rate fell unexpectedly in the three
months to February. []
U.S. stock index futures pointed to a higher open on Wall
Street on Wednesday, ahead of U.S. March retail sales figures
are out at 1230 GMT, U.S. February business inventories are due
at 1400 GMT.
(Additional reporting by Tricia Wright, Editing by Louise
Heavens)
