Banks, retailers lift FTSE ahead of budget

                                
 * Banks gain after Geithner reassurance
                                
 * Retailers gain on Citi note, Carphone Warehouse results
* Budget awaited at 1130 GMT
                                
 
                                
 By Simon Falush
                                
 LONDON, April 22 (Reuters) - Britain's top share index was
0.5 percent higher late Wednesday morning, lifted by gains in
banks and retailers but moves were muted with investors holding
fire ahead of the budget.
                                
By 1035 GMT the FTSE 100 <.FTSE> was 18.62 points higher at
4,006.08 points after inching 3.4 points, or 0.1 percent, lower
in the previous session. 
                                
 The blue-chip index is down 10.4 percent this year, but up
14.8 percent since its trough set on March 9.
                                
 Banks added most points to the index, recovering some of the
losses the previous session after U.S. Treasury Secretary
Timothy Geithner indicated most banks have sufficient reserves
to protect against possible losses.
                                
 HSBC <HSBA.L>, Standard Chartered <STAN.L>, Royal Bank of
Scotland <RBS.L>, Barclays <BARC.L> and Lloyds Banking Group
<LLOY.L> gained 0.3-4.7 percent.
                                
 "Geithner's comments about improved conditions in the U.S.
have galvanised sentiment on UK and European banks... but we
can't say we're out of the woods," said Jeremy Batstone-Carr,
strategist at Charles Stanley.
                                
 Britain's finance minister, Alistair Darling, is set to
deliver the gloomiest budget in a generation at 1130 GMT, as
government borrowing soars to a record high and the economy
shrinks at its fastest pace since World War Two. [ID:nN21490588]
                                
 
                                
 BUDGET WATCH
                                
 "All eyes are on (the budget), I don't expect there to be
any surprises but it hinges on credibility and the market is
very sceptical," said Philip Lawlor, chief portfolio strategist
at Nomura.
                                
 Trading was thin ahead of the budget. The index had seen
34.5 percent of the 90-day moving average traded compared to
over 50 percent for the FTSEurofirst 300 <.FTEU3>.
                                
 Jobless data released on Wednesday underlined the extent to
which the economy is suffering, with the ILO unemployment rate
rising to 6.7 percent from 6.5 percent.
                                
 Data which showed a 52 percent annual drop in mortgage
lending and government borrowing at a record high piled on the
gloom. [ID:nLM563620]
                                
 Retail stocks shrugged off the bleak data as a
forecast-beating update sent Carphone Warehouse <CPW.L> 7.5
percent higher while Citi raised price targets across the sector
and upgraded Next <NXT.L>, up 6.7 percent, to "buy" from "hold".
                                
 Insurers were also higher, benefiting from the slightly
improved sentiment for the financial sector. 
                                
 Old Mutual <OML.L>, Legal & General <LGEN.L> Standard Life
<SL.L> and Aviva <AV.L> gained 1.1-6.4 percent.
                                
 The Bank of England  minutes of its April 8-9 Monetary
Policy Committee showed all nine members voted to keep rates on
hold at 0.5 percent.
                                
 Seven FTSE 100 companies, including BAE Systems <BAES.L>,
Centrica <CNA.L>, Reed Elsevier <REL.L>, Cadbury <CBRY.L> fell
after trading ex-dividend.
                                
 For an interactive timeline on the financial crisis in
Britain please click on:
http://uk.reuters.com//news/globalcoverage/timelines/timeline?tx
=2009042292224.xml&tn=Financial%20crisis%20in%20Britain
 (Reporting by Simon Falush; Editing by Dan Lalor)