* FTSE 100 rises 1.4 pct on banks, oils
* BoE, ECB rate decisions due; Sweden, NZ cut rates
* Drink groups rise on the back of Coca-Cola performance
By Dominic Lau
LONDON, Dec 4 (Reuters) - Britain's top share index rose 1.4
percent by midday on Thursday on hopes of a hefty Bank of
England rate cut, boosting banks, energy stocks and real estate
companies.
By 1104 GMT, the FTSE 100 <> was up 56.29 points at
4,226.25, gaining for the third day in a row. The UK benchmark,
however, is still down 1.7 percent this week and nearly 35
percent for the year.
Banks were up before the Bank of England (BoE) announcement
at 1200 GMT, with Barclays <BARC.L>, HSBC <HSBA.L>, HBOS
<HBOS.L>, Lloyds TSB <LLOY.L> and Standard Chartered <STAN.L> up
between 0.3 to 5.4 percent.
Market players are expecting the BoE to serve up a big rate
cut after Sweden's central bank made a surprise 175 basis point
rate cut and New Zealand slashed rates by 150 basis points.
Sterling hit a 6 1/2-year trough versus the U.S. dollar
after the record Swedish interest rate cut enhanced expectations
of major reductions in the UK.
"All they are doing here with the interest rate cuts is
providing a parachute as the economy is falling, dropping like a
stone," said Philip Lawlor, chief portfolio strategist at
Nomura.
"You need to cut rates to provide a big enough parachute.
That means the eventual landing is not as devastating as it
would otherwise be. Anyone who thinks what they are doing now is
going to provide a very rapid recovery in the economy is barking
mad."
The European Central Bank will also announce its rate
verdict at 1245 GMT.
In the United States, the Treasury Department is developing
a plan to try to reduce mortgage rates on home loans to 4.5
percent on typical mortgages by expanding its purchases of
mortgage-backed securities, sources familiar with the plan said.
[]
Rate-sensitive real estate companies were also in demand,
with Land Securities <LAND.L> surging 5.4 percent, Liberty
International <LII.L> rising 3.8 percent and British Land
<BLND.L> gaining 4.4 percent, while building materials
distributor Wolseley <WOS.L> strengthened 8 percent.
Energy stocks were also firmer, despite softer crude prices.
BP <BP.L> advanced 1.6 percent, Royal Dutch Shell <RDSa.L>
climbed 2.1 percent and BG Group <BG.L> soared 5.2 percent.
Drinks company Diageo <DGE.L> notched up 5.2 percent and
brewer SABMiller <SAB.L> put on 3.1 percent after Coca-Cola Co
<KO.N> and other defensive shares rose overnight.
Rexam <REX.L>, the world's largest drinks can maker, added
2.8 percent.
Defensive drugmakers were also in demand, with
GlaxoSmithKline <GSK.L> up 3.3 percent and Shire <SHP.L> adding
2.6 percent.
Reed Elsevier <REL.L> slipped 3.4 percent after RBS cut its
rating on the Anglo-Dutch publisher to "hold" from "buy".
Rail and bus company Stagecoach <SGC.L> shed 2.9 percent,
extending Wednesday's 16.5 percent slump after it warned of a
potential slowdown in its train business due to the impact on
commuters of the economic downturn. Both JPMorgan and Panmure
Gordon on Thursday cut their price targets on the stock.
Among mid-caps, Michael Page International sank more than 10
percent after the recruiter said its full-year pretax profit
would be around the bottom end of analysts' forecasts, which it
put at 136 million pounds ($200 million). []
(Editing by Victoria Bryan)
