* FTSE 100 gains 1.5 pct
* BoE keeps rates at 0.5 pct, as expected
* Banks buoyed by stress test optimism, broker comment
* Oils lifted by firmer crude price
By Tricia Wright
LONDON, July 8 (Reuters) - Britain's top share index was
higher on Thursday, buoyed by strength in banks, which were
helped by optimism about stress tests and some upbeat broker
comment, while a firmer crude price underpinned gains in oil
stocks.
By 1207 GMT, the FTSE 100 <> index was up 75.07 points,
or 1.5 percent, at 5,089.89, rising for a third consecutive day.
It closed up 49.82 points, or 1 percent, on Wednesday.
Banks were among the biggest gainers, led by Lloyds Banking
Group <LLOY.L>, up 3.8 percent, as BofA Merrill Lynch reiterated
its stance that Lloyds share price would double over the next
two years. Fellow part-nationalised bank Royal Bank of Scotland
<RBS.L> also stood out, up 3.6 percent.
Two senior British banking figures have joined forces to
back a new bid vehicle that will list on the London Stock
Exchange and to seek to buy one of the banks owned by British
taxpayers, Sky News reported on Thursday. []
Banks were also helped by expectations that stress tests for
European banks would not be as stringent as had been feared and
after U.S. peer State Street <STT.N> said on Wednesday its
quarterly operating earnings would easily top Wall Street
forecasts.
"Banks generally are ... higher primarily because there is
an awful lot more confidence in these stress tests..." said
Peter Dixon, an economist at Commerzbank.
"The fact that the stress tests have been widened to include
a large number of banks has given the market some confidence. I
think we have to wait and see exactly what the results of these
tests will be before we get carried away with optimism."
Europe listed 91 banks taking part in financial stress tests
-- including many regional banks, where markets suspect most of
the sore spots are -- as it seeks to restore confidence in the
sector. []
Credit Suisse raised its sector strategy on European banks
to benchmark from 10 percent underweight in a global equity
strategy note on Wednesday. []
The International Monetary Fund on Thursday upgraded its
2010 global growth forecast, on the back of robust growth in
Asia and renewed U.S. private demand, but it also flagged big
risks to the recovery from Europe's debt problems.
[]
Neither the Bank of England and the European Central Bank
made changes to monetary policy on Thursday, as was expected.
[] []
Miners made ground, with Xstrata <XTA.L> leading the sector
higher, up 2.9 percent, supported by an upgrade to "hold" from
"sell" by Panmure Gordon. []
Buyers also came in for integrated oil stocks, which were
helped by a firmer crude price <CLc1>. Royal Dutch Shell
<RDSa.L> added 2.2 percent, while BP <BP.L> rose 2 percent.
BP boss Tony Hayward met with Abu Dhabi Investment
Authority, a state investment fund, on Wednesday, part of a
quest for cash to ward off takeovers and help pay for the worst
oil spill in U.S. history. []
STRONG ARM
Among individual gainers, ARM Holdings <ARM.L> put on 3
percent after Panmure Gordon materially raised its earnings
forecasts for the chipmaker by up to 30 percent and lifted its
target price to 275 pence from 210 pence. []
Elsewhere, Aggreko <AGGK.L> added 3.6 percent, with traders
citing an HSBC note which initiated the temporary power supplier
with an "overweight" rating, and vague talk of bid interest.
And Intertek Group <ITRK.L> gained 3.5 percent as Exane BNP
Paribas raised its rating to "outperform" from "neutral" and
hiked its target price by 16 percent to 1,850 pence in a review
of the European testing companies.
Investors were awaiting the latest U.S. weekly jobless
claims, due at 1230 GMT, to be followed by May U.S. consumer
confidence numbers at 1500 GMT, with U.S. stock futures pointing
marginally downwards ahead of that data following strong gains
on Wall Street on Wednesday.
(Editing by Karen Foster)
