* Commodities gain after bullish China manufacturing data
* Banks rise; data prompts return of risk appetite
* U.S. job figures eyed ahead of non-farm payrolls on Friday
By David Brett
LONDON, April 1 (Reuters) - Britain's top shares gained 0.7
percent by midday on Thursday, as miners and energy stocks,
backed by higher commodity prices, and risk sensitive banks led
a broad-based rally ahead of the Easter break.
By 1045 GMT the FTSE 100 <> was up 40.30 points at
5,719.94 after ending up 7.32 points, or 0.1 percent, on
Wednesday, the final session of the first quarter.
Trade was light approaching midday, with the blue-chip index
having traded around 25 percent of its average 90-day volume.
"We've seen some gentle but fairly broad-based strength this
morning, with the resources sector leading the market higher on
the first day of the second quarter," said Anthony Grech, market
strategist at IG Index.
Miners delivered the bulk of the gains with the sector
buoyed by firmer metal prices, which spiked after two surveys
showed a climb in orders from China's vast manufacturing sector,
pointing to brisk first-quarter GDP growth. []
Rio Tinto <RIO.L>, Xstrata <XTA.L>, Lonmin <LMI.L>, Anglo
American <AAL.L>, Kazakhmys <KAZ.L> and BHP Billiton <BLT.L>
added 1.9 to 3.6 percent.
"With trading volumes likely to wind down in the run-up to
the Easter break, we may see the market amble, rather than
sprint, towards the finish line this afternoon," said Grech, who
pointed out that investors will be eyeing the U.S. Challenger
job-cut report later in the session, ahead of the non-farm
payrolls on Friday.
Analysts forecast a 190,000 increase in U.S. jobs in March
after a fall of 36,000 in February, but investors will have to
wait until Tuesday to see equity market reaction as equity
markets are closed on Friday and Monday.
The FTSE 100 gained 6.1 percent in March, its strongest
month since last August, and is up 4.9 percent this year after
gaining 22 percent in 2009. It has gained in four consecutive
quarters after seeing five quarters of losses prior to that.
RISK RETURNS
As investor confidence grew over the outlook for the global
economy, so did their appetite for perceived riskier assets,
with energy and banking stocks supporting gains in the FTSE 100.
BG Group <BG.L>, BP <BP.L>, Tullow Oil <TLW.L> and Cairn
Energy <CNE.L> added 0.4 to 3.3 percent, with crude heading
above $84 per barrel <CLc1>.
Banks Barclays <BARC.L>, HSBC <HSBA.L>, Standard Chartered
<STAN.L>, Royal Bank of Scotland <RBS.L> and Lloyds Banking
Group <LLOY.L> all gained between 0.5 and 2.2 percent.
Adding to the optimism, British banks expect to strongly
increase corporate lending and unsecured lending to households
over the next three months, a Bank of England survey showed.
[]
British manufacturing activity grew last month at its
fastest rate since October 1994, when the economy was also
recovering from a deep recession, a survey of purchasing
managers showed. []
On the downside, mobile phone heavyweight Vodafone <VOD.L>
shed some recent gains and was the biggest drag on the index,
down 1.5 percent after regulator Ofcom proposed cutting the cost
operators can charge each other to connect calls on their
network. []
(Editing by Simon Jessop)
