Banks, commods help FTSE rise; budget gloom offset

                                
 * FTSE up 1.1 pct; budget wobble overcome
                                
 * Banks higher; Geithner comments counter M.Stanley results
                                
 * Miners, oils rally after recent falls
                                
 * GlaxoSmithkline results disappoint, weigh on pharmas
                                
 
                                
 By Jon Hopkins
                                
 LONDON, April 22 (Reuters) - Britain's leading shares ended
1.1 percent higher on Wednesday as strength in banks and
heavyweight commodities countered a downbeat UK budget and falls
by pharma stocks after results from GlaxoSmithkline <GSK.L>.
                                
 At the close, the FTSE 100 <.FTSE> was up 43.20 points at
4,030.66 points after a volatile afternoon. It ended near the
session peak following a wobble after the budget statement.
                                
 "Stocks have managed to cast the earlier gloom aside but
Alastair Darling should have no illusions that this is in
response to today's budget," said Chris Bennett, senior trader
at ChoiceOdds.
                                
 "Things are definitely grim but most of the bad news was
already known and at least the statement is out of the way."
                                
 Banks added the most points to the blue chip index, rallying
as disappointing numbers from Morgan Stanley <MS.N> were offset
by soothing words from U.S. Treasury Secretary Timothy Geithner.
                                
 HSBC <HSBA.L>, Standard Chartered <STAN.L>, Royal Bank of
Scotland <RBS.L>, Barclays <BARC.L> and Lloyds Banking Group
<LLOY.L> gained between 3.9 and 9.6 percent.
                                
 Geithner indicated on Tuesday that most banks have
sufficient reserves to protect against possible losses,
enhancing the brighter picture for the sector created by the
recent flow of earnings reports across the Atlantic.
                                
 But Morgan Stanley slightly besmirched that picture, posting
a second straight quarterly loss and slashing its dividend.
                                
 Heavyweight oil majors recovered from falls helped by a
steadier crude price <CLc1>, with Royal Dutch Shell <RDSa.L>, BP
<BP.L>, BG Group <BG.L>, Tullow Oil <TLW.L>, and Cairn Energy
<CNE.L> up between 0.2 and 1.2 percent
                                
 Miners also saw a turnaround in fortunes, with Eurasia
Natural Resources <ENRC.L>, Rio Tinto <RIO.L>  Xstrata <XTA.L>,
and BHP Biliton <BLT.L> gaining between 2.1 and 7.7 percent.
Lonmin <LMI.L> missed out ahead of an update, losing 2.4
percent.
                                
 
                                
 BUDGET BLUES BUCKED
                                
 The UK government projected a massive increase in public
debt and announced a rise income tax and a curb on pension
relief for high earners in its annual budget on Wednesday.
                                
 Delivering his second budget, Finance Minister Alastair
Darling said the British economy will shrink by 3.5 percent in
2009, the worst performance since World War Two. [ID:nLM580308]
                                
 "The Chancellor is being more cautious than he has been on
his estimates, highlighting what a perilous state the country's
finances are in and what a desperate state the UK economy is
in," said Henk Potts, strategist at Barclays Wealth.
                                
 Life insurers looked to be among the biggest losers from the
budget after the chancellor confirmed plans to curb pension
relief for anyone earning in excess of 150,000 pounds.
                                
 Friends Provident <FP.L>, Prudential <PRU.L>, and Old Mutual
<OML.L> shed between 0.5 and 4.4 percent.
                                
 Pharmacutical stocks were the biggest blue chip fallers
knocked by first-quarter results from GlaxoSmithKline <GSK.L>,
which fell short of expectations as the figures reflected the
impact of patent losses on several drugs and research writeoffs.
                                
 Glaxo shed 3 percent, while AstraZeneca <AZN.L> lost 0.3
percent, and Shire <SHP.L> fell 0.4 percent.
                                
 Jobless data released on Wednesday underlined the extent to
which the economy is suffering, with the International Labour
Organization (ILO) unemployment rate rising to 6.7 percent from
6.5 percent.
                                
 Data that showed a 52 percent annual drop in mortgage
lending and government borrowing at a record high also piled on
the gloom. [ID:nLM563620]
                                
 However, retailers shrugged off the glum data and found
support from forecast-beating trading updates from mid caps Game
Group <GMG.L> and Carphone Warehouse <CPW.L> and positive
comment from Citi. The broker raised price targets across the
sector and upgraded Next <NXT.L> to "buy" from "hold".
                                
 Next <NXT.L>, Marks & Spencer <MKS.L>, Kingfisher <KGF.L>
and Home Retail Group <HOME.L> gained between 3.1 and 7.4
percent. Game Group and Carphone Warehouse added 12.8 percent
and 7.1 percent, respectively.
                                
(Editing by Karen Foster)