* Commodities strong; dlr weakness lifts oil, metal prices
* Banks higher, helped by broker strategy upgrade
* Shire among handful of fallers after broker downgrade
By Tricia Wright
LONDON, Oct 6 (Reuters) - Britain's top share index was up
1.6 percent at midday on Tuesday, driven by gains from miners
and energy stocks buoyed by firmer commodity prices, and with
banks on the rise helped by a broker strategy upgrade.
At 1118 GMT, the FTSE 100 <> was up 79.58 points at
5,103.91, after closing 0.7 percent higher on Monday.
"A good rebound... we had a (bad) figure in the UK -- the
industrial production figures on the manufacturing side -- but
it just goes to show you that the UK is totally inconsequential
to the FTSE 100," said Mike Lenhoff, chief strategist at Brewin
Dolphin.
British industrial output in August fell unexpectedly and at
its sharpest monthly pace since January, official data showed on
Tuesday, dampening expectations for a strong rebound in growth
in the third quarter of this year. []
Energy stocks gained as crude prices <CLc1> rose above $71 a
barrel, helped by a fall in the dollar after a report Gulf Arab
states were in talks to replace the U.S. unit with a basket of
currencies in oil trading.
Royal Dutch Shell <RDSa.L>, BP <BP.L> and BG Group <BG.L>
added between 1.7 percent and 2 percent.
Dollar weakness also underpinned higher metals prices, with
gold rallying to an 18-month high, boosting the mining sector.
Antofagasta <ANTO.L>, Eurasian Natural Resources <ENRC.L>,
Rio Tinto <RIO.L>, Kazakhmys <KAZ.L> and Xstrata <XTA.L> put on
2.7-5.3 percent.
Banks built on Monday's gains, buoyed by a BofA Merrill
Lynch strategy upgrade of the sector to 'overweight', with HSBC
<HSBA.L>, Barclays <BARC.L>, Royal Bank of Scotland <RBS.L> and
Lloyds Banking Group <LLOY.L> adding 1.1-2.7 percent.
Standard Chartered <STAN.L>, helped also by a target price
hike from Credit Suisse to 1,185 pence from 1,600 pence, climbed
2.3 percent.
Investors also digested a 4.8 billion euro capital raising
by French bank Societe General <SOGN.PA> to enable it to repay
state support and pursue growth opportunities. []
A Citigroup upgrade to 'buy' from 'hold' helped Rolls-Royce
<RR.L>, up nearly 4 percent, with the broker hiking its target
price for the engineer to 550 pence from 465 pence, saying it
saw upside risk to estimates.
U.S. stocks indices looked set to build on gains made Monday
when ISM data showed the economy's critical services sector
expanded for the first time since August 2008.
SHIRE BIG FALLER
Drugmaker Shire <SHP.L> was among a handful of FTSE 100
fallers, off 2.1 percent, pressured by a UBS downgrade to
'neutral' from 'buy' on valuation grounds.
GlaxoSmithKline <GSK.L>, however, rose 1.1 percent, boosted
by support for its experimental kidney cancer drug Votrient.
[]
The FTSE 100 has surged 47.5 percent since hitting a
six-year trough in March, though is still down 5.8 percent from
its level in mid-September 2008 before the collapse of Lehman
Brothers.
"The FTSE 100 is geared towards the global economy, and the
global economy is being led by Asia at the moment, and pretty
soon also by clearly America, and that's where the newsflow is
strongest and best and most supportive," Lenhoff said.
Strong newsflow came from Australia on Tuesday, where the
Reserve Bank of Australia confirmed the relative strength of the
Australian economy by raising its cash interest rate by 0.25
point to 3.25 percent. []
(Editing by Dan Lalor)
