* FTSE 100 rises 0.4 pct
* Banks, commods biggest gainers
* Pharmas down on vaccine sales woes
* Next leads retailers lower after 2010 caution
By Tricia Wright
LONDON, Jan 5 (Reuters) - Strong banks helped drive
Britain's top share index higher by midday on Tuesday as
Barclays <BARC.L> gained on market talk that it may lift its
outlook and a rise in commodity stocks also adding to gains.
At 1204 GMT, the FTSE 100 <> was up 21.10 points, or
0.4 percent, at 5,521.44, having started the day in negative
territory.
The index closed 1.6 percent higher at 5,500.34 on Monday,
its highest close since Sept. 2, 2008 -- the month when Lehman
Brothers collapsed.
"I think really it's just a continuation of the rally that
we've seen over the last few days, on general optimism about
corporate earnings," said Angus Campbell, head of sales at
Capital Spreads.
"There's also maybe a little bit of optimism ahead of
Friday's non-farm payrolls," he said.
Banks were the standout gainers, building on the previous
session's rise. Barclays, which was up 4.8 percent, was not
immediately available for comment on the market talk.
Royal Bank of Scotland <RBS.L>, HSBC <HSBA.L>, Standard
Chartered <STAN.L> and Lloyds Banking Group <LLOY.L> put on 0.7
to 7.3 percent.
Separately, Deutsche Bank said in a note that Barclays and
Lloyds were among its top picks in European banks.
Man Group <EMG.L> was a notable riser, taking on 5.3
percent, after Nomura issued an upbeat note on the speciality
finance sector, advocating a "buy" on the hedge fund group.
The UK benchmark index posted a 22 percent rise in 2009, its
biggest annual percentage increase since 1997.
Miners rose, with investors still heartened by Monday's
strong manufacturing data from China, although with base metals
prices largely lower.
Xstrata <XTA.L>, Anglo American <AAL.L> and Rio Tinto
<RIO.L> put on 1.7 to 2.3 percent.
Energy stocks were also in favour as the crude price <CLc1>
edged up towards $82 a barrel, as cold snaps in key consumers
the United States and Europe boosted demand for heating fuel.
Royal Dutch Shell <RDSa.L>, BP <BP.L> and BG Group <BG.L>
added 0.6 to 1.2 percent.
RETAIL GLOOM
Retailers suffered, with Next <NXT.L> the biggest blue-chip
faller, down 2.8 percent, after the fashion chain warned 2010-11
profits could be flat, even as it upgraded 2009-10 forecasts
after a solid Christmas. []
Marks & Spencer <MKS.L>, which is due to issue a trading
update on Wednesday, dropped 2 percent, while Tesco <TSCO.L> and
J Sainsbury <SBRY.L> lost 1.5 and 1.2 percent, respectively.
Pharmaceutical stocks were also pressured, impacted by news
that France cancelled 50 million doses of H1N1 flu shots it had
ordered to combat the virus. []
France had ordered the shots from Sanofi-Pasteur, a unit of
Sanofi-Aventis <SASY.PA>, GlaxoSmithKline <GSK.L>, Novartis
<NOVN.VX> and Baxter International <BAX.N>.
GlaxoSmithKline dropped 2.3 percent, while AstraZeneca
<AZN.L> and Shire <SHP.L> lost 0.6 and 1.5 percent respectively.
Cadbury <CBRY.L> shed 1.9 percent. Kraft Foods <KFT.N> said
it was raising the cash portion of its hostile 10 billion pounds
takeover offer for the British confectioner by 60 pence per
share, funded by a deal to sell its North American pizza unit to
Swiss food giant Nestle <NESN.VX>. []
Separately, Nestle said it had no intention to bid for
Cadbury, ending speculation about one potential rival bidder.
(Editing by Mike Nesbit)
