* Commodity stocks and banks gains on stronger Wall St
* UK Q1 GDP contracts, sharpest drop since 1979
By Dominic Lau
LONDON, April 24 (Reuters) - Britain's top share index rose
1.2 percent by midday on Friday, shrugging off data showing the
UK's first-quarter growth shrinking at its sharpest pace in 30
years, as better U.S. sentiment lifted banks and commodity
stocks.
By 1017 GMT, the FTSE 100 <> was up 49.99 points at
4,068.22, after losing 0.3 percent on Thursday. The UK index is
down 8.3 percent this year after sliding more than 31 percent in
2008.
Banks gained, boosted by better-than-expected results from
several U.S. regional banks. Barclays <BARC.L>, Lloyds Banking
Group <LLOY.L> and HSBC <HSBA.L> added 1 to 3.3 percent.
A price target hike from UBS also added to gains in Lloyds.
U.S. stocks rose on Thursday as earnings from big U.S.
regional banks, including PNC Financial Services Group Inc
<PNC.N> and Fifth Third Bancorp <FITB.O>, provided glimmers of
hope for a sector damaged by rising loan losses as the recession
persists.
U.S. Treasury Secretary Timothy Geithner, writing in the
Financial Times ahead of the meetings of G7 and G20 officials in
Washington later in the day, said there were signs of
improvement in global markets and the world economy but that the
2009 outlook remained challenging. []
Britain's economy shrank at its sharpest rate since 1979 in
the first three months of 2009 and more dramatically than
expected, suggesting recession may be deeper than feared.
[]
UK March retail sales, however, rose 0.3 percent on the
month, far better than analysts' forecasts of minus 0.5 percent.
"The market at the moment is focusing on leading indicators.
With the Ifo out this morning from Germany, coming through
better-than-expected, this is really the main focus for the
market rather than the GDP numbers," said Gareth Evans, UK
equity strategist at UBS.
German corporate sentiment rose in April to its highest
level in five months, a closely watched survey showed,
suggesting the downturn in Europe's largest economy may be
easing. []
"We have passed the worst in terms of downgrades of
earnings. We are seeing leading indicators bottoming. Valuations
are pretty pervasive. For those three reason, even if the market
does come back from here, I'd still be looking to be
constructive on the equity market," Evans said.
SLICK OILS, SHINY METALS
Oil producers added the most points to the index as crude
<CLc1> traded near $50 a barrel. BP <BP.L>, Royal Dutch Shell
<RDSa.L>, BG Group <BG.L>, Cairn Energy <CNE.L> and Tullow Oil
<TLW.L> put on 1.6 to 3.2 percent.
Miners were firmer, with Kazakhmys <KAZ.L>, Vedanta
Resources <VED.L>, Anglo American <AAL.L>, Xstrata <XTA.L>,
Antofagasta <ANTO.L>, Eurasian Natural Resources <ENRC.L> and
Rio Tinto <RIO.L> rising between 1.7 and 5.9 percent.
Amlin <AML.L> advanced 3.5 percent after Goldman Sachs
upgraded the Lloyd's of London insurer to "neutral" from "sell"
and removed it from its "conviction sell list".
BAE Systems <BAES.L> strengthened 4 percent after UBS added
the defence contractor to its "most preferred alpha preference
list", saying it offered high visibility of earnings growth,
strong cash generation and a very attractive valuation.
Drugmaker AstraZeneca <AZN.L> rose 3.7 percent after
European regulators recommended its drug Iressa for certain lung
cancer patients late on Thursday.
Schroders <SDR.L> lost 2.8 percent, extending the previous
session's 6.9 percent fall after its first-quarter results.
Morgan Stanley on Friday cut its price target on the asset
manager.
(Editing by Rupert Winchester)
