* Financials higher on euro zone debt deal hopes
* Low interest rates and QE could be extended: BoE
By David Brett
LONDON, Feb 10 (Reuters) - Britain's top shares were sharply
higher at midday on Wednesday as financials led a broad-based
rally on hopes of an imminent solution to euro zone debt worries
and after a report that UK inflation would remain low.
By 1224 GMT, the FTSE 100 <> was up 58.25 points, or
1.1 percent, at 5,170.09, having finished 0.4 percent higher on
Tuesday. The index is now in positive territory for the third
consecutive session.
Hopes that a solution could soon be found to euro zone debt
issues gathered momentum as traders cited a media report that
Germany was considering aid for Greece beyond loan guarantees.
[]
European Union leaders will hold a special summit on the
economy on Thursday, but investors remained cautious on whether
a deal on Greek debt could be done.
"There is a bit of mixed messaging that is keeping traders
on edge but there is lot of optimism coming from the murmurs
over the Greece situation," said Joshua Raymond, market
strategist at City Index.
Financial stocks, which have been under pressure over
potential exposure to debt problems in the euro zone, were
roused from the doldrums.
Europe's biggest bank HSBC <HSBA.L> added 2.1 percent, while
Barclays <BARC.L>, Lloyds Banking Group <LLOY.L> and Standard
Chartered <STAN.L> were 2.8-4.7 percent higher.
Life insurers also found support, with Aviva <AV.L> up 5.3
percent, bouncing back from recent weakness, and helped by some
trader talk that it may be the target of M&A activity from
Resolution <RSL.L>.
Resolution shed 1.1 percent ahead of full-year new business
numbers due on Thursday, while Prudential <PRU.L> and Legal &
General <LGEN.L> gained 5 and 4.7 percent, respectively.
Miners swung higher with metal prices ed as the demand
outlook improved. Vedanta Resources <VED.L>, Xstrata <XTA.L>,
Antofagasta <ANTO.L> and Anglo American <AAL.L> rose 1-2.6
percent.
BHP Billiton <BLT.L> was a little weaker than its peers, up
just 1 percent, after it signalled caution over a sustained
global recovery and held off from a share buyback after
reporting its weakest first-half profit in four years.
[]
Rio Tinto <RIO.L>, which reports results on Thursday, rose
1.6 percent.
BOE INFLATES OPTIMISM
Investors reacted bullishly to the Bank of England inflation
report, which raised expectations that interest rates will need
to stay low for longer than many analysts currently predict.
The central bank also refused to rule out further
quantitative easing measures after the report showed the British
economy recovering only very slowly. []
The report came shortly after upbeat economic data from the
UK's manufacturing sector showing British manufacturing output
rose more than expected in December. []
Energy stocks gained as crude <CLc1> nudged above $74 a
barrel. BG Group <BG.L> and BP <BP.L> were up 1.9 and 1.3
percent, respectively.
Utilities were higher, led by Centrica <CNA.L>, up 3.8
percent as Morgan Stanley raised its recommendation and its
target price.
The broker also lifted its target price for National Grid
<NG.L>, which gained 1.6 percent.
Consumer goods group Reckitt Benckiser <RB.L> climbed 1.8
percent after saying it expected good growth in 2010, as it
posted in-line fourth-quarter results. []
The world's largest interdealer broker ICAP <IAP.L> added
8.1 percent, topping the FTSE 100 <> leaders board,
extending the week's recovery to over 10 percent following last
Friday's near 20 percent plunge after a profit warning, with
Goldman Sachs the latest broker to raise its rating on the firm.
On the downside, software maker Autonomy <AUTN.L> fell 6.3
percent after the company announced a 500 million pound ($779
million) convertible bond to be used for acquisitions and said
it was buying one of its resellers, Micro Link.
(Editing by Will Waterman)
