* FTSE 100 gains 1 percent
* Miners slide following collapse of BHP Billiton, Rio deal
* Financials continue recovery
By Simon Falush
LONDON, Nov 25 (Reuters) - Britain's top share index rose 1
percent by midday on Tuesday with gains in embattled financials
outweighing a slide in resources as the world's top miner, BHP
Billiton <BLT.L>, dropped its hostile bid for Rio Tinto <RIO.L>.
The benchmark's rise added to the record gains posted the
previous session, as investor anxiety about the financial sector
eased slightly.
By 1128 GMT, the FTSE 100 <> had gained 29.25 points to
4,192.21 after a record 9.8 percent gain the previous session.
Banks, which have fallen some 56 percent this year
<.FTNMX8350>, hammered by their exposure to the ailing credit
market, recovered some of their losses as investors looked to
pick up cheap assets.
"Lot's of stocks were oversold and as happened after
previous sell-offs, there's been a bit of a bounce," said Colin
McLean, managing director at SVM Asset Management in Edinburgh.
He said measures to boost the UK economy announced on Monday
in the pre-budget report -- including cutting value-added tax to
15 percent, from 17.5 percent -- would benefit banks like HBOS
<HBOS.L> and Lloyds TSB <LLOY.L> as they are heavily exposed to
the UK consumer.
Lloyds TSB added 9.1 percent and HBOS gained 6.6 percent,
while Barclays <BARC.L> firmed 6.9 percent.
Other financial stocks also rose, with Man Group <EMG.L>
gaining 4.6 percent and Schroders <SDR.L> adding 10.2 percent.
MINERS SLIDE
Mining stocks were the biggest fallers as the collapse of
the BHP Billiton Rio deal highlighted the problems of
deteriorating demand which have hammered the sector in recent
months.
While BHP Billiton gained 16.2 percent on relief it is not
bidding, Rio Tinto shares fell 35.4 percent, leading other
miners lower.
Eurasian Natural Resources <ENRC.L>, Xstrata <XTA.L>, and
Lonmin <LMI.L> lost between 2.6 percent and 4.8 percent.
The World Bank said China's growth could well slow to its
weakest pace in almost two decades next year, the latest grim
prognosis for a global economy buckling despite the concerted
efforts of policymakers. []
What started more than a year ago as a meltdown in the U.S.
market for high-risk mortgages has engulfed the world, freezing
access to credit, sparking bank collapses and requiring the
financial bailout of entire countries.
"The fundamentals have not changed, corporate earnings still
look fairly weak, so yesterday's increase should be seen as a
bear market rally," said Richard Hunter, head of equities at
Hargreaves Lansdown.
Shares in BT Group <BT.L> slid 2.1 percent after Merrill
Lynch cut its rating to "neutral" from "buy" and reduced its
price target, saying the telecoms company is increasingly
exposed to the sharp slowdown in UK consumer and corporate
spending.
Shares in Wolseley <WOS.L>, the British plumbing and
heating supplies company, fell 5.1 percent as RBS cut its rating
to "sell" from "hold", and reduced its target price to 224 pence
from 300 pence.
(Editing by Andrew Macdonald)
