* FTSE 100 up 1.0 pct
* Battered banks and commodity stocks rebound
* Utilities weak on switching out of defensives
(For more the financial crisis, click on [])
By Jon Hopkins
LONDON, Oct 9 (Reuters) - Britain's top share index was up 1
percent at midday on Thursday, recovering some of the previous
session's hefty losses as battered banks and commodity stocks
rebounded but staying well below earlier highs.
At 1113 GMT the FTSE 100 <> was up 43.9 points at
4,410.6, below the morning peak of 4,512.5 having tumbled 5.2
percent on Wednesday to its lowest close in over four years.
The UK benchmark is still down 31 percent this year.
"We are seeing a nice little relief rally," said David Buik
of BGC Capital. "But there is no real conviction so please enjoy
it while you can."
Banks rose, with the FTSE 350 banks index <.FTNMX8350> up
1.3 percent. Citigroup said it had raised UK banks to "neutral"
from "underweight" after their underperformance and the
government's rescue plan as well as coordinated rate cuts from
major central banks.
Royal Bank of Scotland <RBS.L>, Lloyds TSB <LLOY.L> and HBOS
<HBOS.L> were up between 8.9 and 29.7 percent.
"There is still a degree of cynicism for banks in spite of
the rescue package and rate cut moves, with LIBOR remaining high
and lending amongst each other still non-existent," said Buik.
"Getting the banks lending to each other is the key to the
kingdom and the key to success," he added.
HSBC <HSBA.L> was down 1.2 percent, and Barclays <BARC.L>,
off 4.2 percent, missed out on the rally.
Barclays is likely to boost its capital by offering existing
investors the chance to take preference shares or other
instruments before it taps government funds, people familiar
with the matter said. []
U.S. stock futures were indicating a higher open after Wall
Street had fallen for the sixth straight session on Wednesday
after the coordinated worldwide cut in interest rates failed to
alleviate fears about a global recession.
Although with some key U.S. earnings report and data due
across the Atlantic, the strength of the expected rebound was
fading.
The New York Times said the U.S. Treasury Department is
considering taking ownership stakes in many U.S. banks in a bid
to restore confidence in the badly shaken financial system.
[]
Financial ministers and central bank chiefs from the G7
countries will meet in Washington on Friday.
"There is slight enthusiasm for more ... capricious stocks
against defensive stocks at the moment. It's a good signal but
the real clue will be from how convinced they are and what they
are going to say at the G7 meeting," said Stephen Pope, chief
global market strategist at Cantor Fitzgerald Europe.
Among other financials, insurer Aviva <AV.L> jumped 10
percent after it said it had reinforced its buffer against
slumping stock markets through increased hedges.
Man Group <EMG.L> gained 10 percent and Schroders <SDRt.L>
took on 8.7 percent, reflecting the recovery in equity markets.
COMMODITIES BOUNCE BACK
Energy stocks were in demand as crude prices <CLc1> ticked
back above the $89 a barrel level. BP <BP.L>, BG Group <BG.L>
and Cairn Energy <CNE.L> were up between 2.2 and 16.3 percent.
Energy services company John Wood Group <WG.L> advanced 6.8
percent after it said trading performance had been strong for
the year and expected its growth to continue.
Heavyweight miners bounced back, with BHP Billiton <BLT.L>,
Rio Tinto <RIO.L>, Anglo American <AAL.L>, Eurasian Natural
Resources <ENRC.L>, Antofagasta <ANTO.L> and Vedanta Resources
<VED.L> rising 3.8 to 13.7 percent.
Mexican miner Fresnillo <FRES.L>, however, shed 1.1 percent
despite posting a 3.5 percent rise in third-quarter silver
output and saying it was on target to meet its 2008 target.
Utilities eased as traders highlight switching out of
defensive issues and with a cautious note from Dresdner
Kleinwort including some downgrades in ratings.
The broker cut its stance on both Scottish & Southern Energy
<SSE.L> and Drax <DRX.L> to "sell" from "hold", and downgraded
its rating for International Power <IPR.L> to "reduce" from
"buy".
Shares in SSE dropped 3.8 percent, Drax lost 2.6 percent,
and International Power fell 3.2 percent.
(Additional reporting by Dominic Lau; Editing by Greg Mahlich)
