* FTSE 100 up 0.6 pct by mid-session
* Market shrugs off weak industrial, manufacturing data
* Banks gain as sentiment improves
* U.S. stimulus package vote, key jobs data eyed
By Kylie MacLellan
LONDON, Feb 6 (Reuters) - Britain's top share index gained
0.6 percent by mid-session on Friday, led by a rally in banking
stocks as sentiment on the sector was buoyed ahead of a vote on
a U.S. stimulus package, while investors awaited key jobs data.
By 1141 GMT, the FTSE 100 <> was up 25.76 points at
4,254.69, on track for a fourth straight day of gains. But the
index is down 4.1 percent this year after losing over 31 percent
in 2008.
Investors shrugged off dismal data which showed British
industrial production and manufacturing output both fell sharply
in December, posting their largest annual fall since 1981, a
further sign that the economy is shrinking fast.
The Office for National Statistics said that, all things
being equal, this would take 0.1 percentage points off Q4 GDP.
"In the face of bad economic news the market is looking
resilient and that's been the way so far this year in a sense
because the news flow has gone from bad to worse and yet the
markets generally have held up," said Mike Lenhoff, chief
strategist at Brewin Dolphin.
"I think the markets have now got to the point where they
feel more or less satisfied that they've priced in a lot of the
bad news; what they are looking for are hopeful signs that we'll
see our way through this recession."
Separate data showed that producer price inflation was
stronger than analysts had forecast. []
The progress of the U.S. stimulus package will be closely
watched later on Friday, when the Democrat-led Senate will try
again to pass a $937 billion stimulus package even as moderate
lawmakers sought to broker a deal to trim proposed spending.
Non-farm payrolls figures due at 1330 GMT are predicted to
paint an even bleaker picture of the U.S. labour market, with an
estimated half a million jobs shed in January. []
BANKS LEAD GAIN
Banks led the gains in the FTSE, all lifted into positive
territory ahead of the vote as investors continued to ponder how
their so-called "toxic assets" will be managed.
Royal Bank of Scotland <RBS.L> was the top FTSE gainer,
adding 8.2 percent. While Lloyds Bank Group <LLOY.L> and
Barclays <BARC.L> were up 6.9 and 7.3 percent respectively.
"There are various articles around about whether the
(creation of a) "bad bank" idea will re-emerge or that the asset
protection insurance will be tweaked," said Tim Whitehead
stockbroker at Redmayne-Bentley.
"The threat of wholesale nationalisation is receding and
against that backdrop it's understandable that there's support
for the banks."
Miners also gained across the board, supported by firmer
metals prices. Kazakhmys <KAZ.L>, Rio Tinto <RIO.L>, Xstrata
<XTA.L> and Vedanta <VED.L> were all up between 1.8 and 3.8
percent.
British Airways <BAY.L> was up 2.9 percent despite posting a
nine-month pretax loss of 70 million pounds ($102.4 million),
down from a profit of 816 million pounds a year ago, as it
reaffirmed its full-year revenue guidance of at least 4 percent
year on year. []
