* FTSE 100 up 1.3 percent
* Miners lifted by higher metal prices
* Weak M&S results dent retailers
* Banks lifted on talk of sovereign fund purchase
By Simon Falush
LONDON, May 19 (Reuters) - Financials gained on growing
investor confidence by midday on Tuesday and higher commodity
prices lifted miners, but weak results from Marks & Spencer
<MKS.L> dented retailers, limiting gains for Britain's top share
index.
By 1056 GMT the FTSE 100 <> was up 1.3 percent or 55.70
points at 4,502.15 after gaining 2.3 percent in the previous
session, recovering all of last week's 3.5 percent fall and on
track for its highest close in over four months.
The world's top policymakers offered their most upbeat
assessment of the global economy in months on Tuesday, saying it
was stabilising and that it could start to grow again as soon as
late this year. []
This added to the sense that the demand outlook was
improving, lifting metal prices and boosting mining stocks.
Rio Tinto <RIO.L>, Kazakhmys <KAZ.L>, Eurasian Natural
Resources <ENRC.L>, Anglo American <AAL.L>, Lonmin <LMI.L> and
BHP Billiton <BLT.L> gained between 1.8 and 6.6 percent.
"There's a feeling that the rally has a bit more to run...
and investors are looking to get in at lower levels after last
week's stumble," said Peter Dixon, economist at Commerzbank.
Financial stocks were also beneficiaries of the improved
sentiment, while news that Britain has held talks with investors
to gauge their interest in part-nationalised lenders also
boosted interest in the sector. []
International interest in the potential sale of parts of the
UK banking sector also helped to boost the pound, which hit a
five-month high against the dollar <GBP=>.
"There's a sense that the worst is over for the financial
sector and (the potential sale of stakes in UK banks to overseas
investors) is adding fuel to the fire," Dixon said.
HSBC <HSBA.L>, Standard Chartered <STAN.L>, Royal Bank of
Scotland <RBS.L>, Barclays <BARC.L> and Lloyds Banking Group
<LLOY.L> added 1.3-4.4 percent.
Life insurers were also buoyed by the increase in risk
appetite. Aviva <AV.L>, Legal & General <LGEN.L>, Prudential
<PRU.L>, Standard Life <SL.L> added 2.3-6.5 percent.
RSA Insurance <RSA.L> gained 4.4 percent after being
upgraded to "overweight" by JP Morgan.
ICAP <IAP.L> added 7.8 percent after the world's largest
interdealer broker beat forecasts with a 5 percent rise in
annual pretax profit. []
Thomson Reuters <TRIL.L> added 6.2 percent after Morgan
Stanley upgraded the global information and media group to
"overweight" from "equal-weight" and hiked its price target.
Investors shrugged off data which showed CPI falling to 2.3
percent in April, it's lowest in over a year, and RPI falling to
-1.2 percent, the lowest since records began in 1948.
SPARKLE DIMS FOR MARKS
But the blue chip index underperformed its European peers as
signs that UK consumer spending is suffering in the face of the
recession hurt retailers.
Marks & Spencer <MKS.L> was the heaviest faller on the FTSE
100 index, down 6.8 percent after it posted an expected 40
percent slide in full-year profit and cut its final dividend to
preserve cash.
The retailer has had a strong run this year and is still up
64 percent since its trough for the last 12 months set in
September.
Peer Next <NXT.L> slipped 3.9 percent while other retailers
also suffered, with Tesco <TSCO.L>, Morrison <MRW.L> and Home
Retail <HOME.L> off between 0.3 and 1.3 percent.
Rolls Royce <RR.L> fell 2.5 percent after UBS cut the
engineer to "sell" from "neutral".
(Reporting by Simon Falush; editing by Mike Nesbit)
