* Banks gain; Santander results underpin positive sentiment
* Schroders, Aviva boosted by broker upgrades
* Rexam falls as cash-call confirmed
By David Brett
LONDON, July 29 (Reuters) - Britain's FTSE 100 share index
was 1 percent higher at midday on Wednesday, with financials
helped on the back of strong numbers from the British arm of
Spain's Banco Santander <SAN.MC> and bullish broker comment.
By 1059 GMT the FTSE 100 <> was up 1.0 percent, or
43.34 points at 4,572.18 points, after ending 1.3 percent lower
on Tuesday as it failed to break records with a 12th session of
gains.
UK banks got a shot in the arm after the British arm of
Santander, which includes Abbey, said profits rose by a third in
the first half of the year as bad debts showed a second
consecutive quarterly decline. []
Barclays <BARC.L>, HSBC <HSBA.L>, Lloyds Banking Group
<LLOY.L>, Royal Bank of Scotland <RBS.L> and Standard Chartered
<STAN.L> rose between 0.6 and 3.6 percent.
Philip Gillett, sales trader at IG Index, said the market is
riding a wave of optimism, with corporate numbers outweighing
disappointing fundamentals.
"It is following on from recent sentiment. It is quite
amazing how things have turned around. Two weeks ago I would
have said that we were heading below 4,000 but I still don't
think the fundamentals are that great."
The market shrugged off figures released by the Bank of
England showing weaker than expected consumer credit data, as
news that British mortgage approvals hit their highest since
April 2008 boosted sentiment. []
Asset management firm Schroders <SDR.L> was a top riser on
the blue chip index, up 5 percent, after Morgan Stanley raised
its rating on the stock to "overweight" from "underweight" and
upped its price target.
Life insurer Aviva <AV.L> added 2.6 percent as Deutsche Bank
upped its rating to "buy" in a review of the UK sector as it
sees possible consolidation on the horizon.
Prudential <PRU.L>, Standard Life <SL.L>, Friends Provident
<FP.L.> and Old Mutual <OML.L> added 0.4 to 4.6 percent.
Energy issues provided the biggest prop for blue chips,
shrugging off a fall in the price of crude <CLc1>, with BP
<BP.L> rallying 1.1 percent after its mixed results on Tuesday,
while Royal Dutch Shell <RDSa.L> added 1.7 percent ahead of its
second quarter numbers due on Thursday.
But BG Group fell 1.4 percent after it posted a 31 percent
drop in its second-quarter profits and said lower gas demand
meant it would not meet its 2009 production target.
[]
Miners also added some strength, with Eurasian Natural
Resources <ENRC.L> the top blue chip riser, up 5.1 percent,
while Kazakhmys <KAZ.L>, Rio Tinto <RIO.L>, Xstrata <XTA.L>, and
Anglo American <AAL.L>.
But BHP Billiton fell 1.2 percent. The miner has agreed with
unnamed customers to take a 33-44 percent price cut for
contracted iron ore shipments, covering 23 percent of its total
sales volumes. []
Selected defensive stocks gained ground. British American
Tobacco <BATS.L> rose 1.2 percent, while Imperial Tobacco
<IMT.L> was up 2 percent, and Vodafone rose 1.3 percent.
BAE Systems <BAES.L> was up 2.1 percent, after it won a U.S.
contract and ahead of results due on Thursday. []
On the downside, pharmaceuticals relinquished some of the
gains made on Tuesday, with AstraZeneca <AZN.L>, Shire <SHP.L>
and GlaxoSmithKline <GSK.L> down between 0.3 and 0.7 percent.
Drinks can maker Rexam <REX.L> was the top blue chip faller
down 7.5 percent after the group confirmed a 334.3 million pound
rights issue but still traded above its theoretical rights price
as it reports better-than-expected results. []
On the second-line, a batch of well-received results gave a
boost to chip maker CSR <CSR.L>, car dealer Inchcape <INCH.L>,
and engineer Morgan Crucible <MGCR.L>, up 15, 10, and 9.9
percent respectively.
(Editing by Rupert Winchester)
