* FTSE 100 up 1 percent
* Kingfisher, Next standout risers after results
* Engineer Invensys top faller; CEO steps down
By Tricia Wright
LONDON, March 24 (Reuters) - Britain's top share index rose
on Thursday, returning to levels last seen just before the
earthquake in Japan, helped by miners on hopes that the
country's rebuilding will boost demand for metals.
By 1256 GMT, the FTSE 100 <> was up 57.73 points, or 1
percent, at 5,853.61, on track for a second straight day of
rises after it advanced 0.6 percent on Wednesday,
Buyers came in for the miners, with traders seeing Japan's
rebuild as favourable for copper, while risk sensitive energy
stocks also notched up good gains as observers noted some return
of risk appetite to the market.
Retailers were also in demand, with top spot on the
blue-chip leader board held by Kingfisher <KGF.L>, up 7.5
percent, after full-year profits beat forecasts, while a
dividend hike helped fashion retailer Next <NXT.L> to the second
spot, ahead 5.4 percent.
Some observers saw these share price moves as overdone.
"It seems a little bit too bullish to make these sort of
moves in a day, and the likes of Next did guide cautiously going
forward as well; it could be a little bit too much too soon,"
Manoj Ladwa, senior trader at ETX Capital, said.
The strong results and positive growth strategies of top
retailers offset news that British retail sales fell more than
expected in February. Official data showed they retraced some of
January's rebound after a jump in prices, which was only partly
due to the rise in VAT, hit volumes. []
Deutsche Bank said in a note that this weak number presents
a buying opportunity, with the broker expecting household
spending "to surprise to the upside in H2 2011 due to a
supportive credit impulse and despite rising interest rates".
The broker named Kingfisher as its top pick.
EUROPE DEBT LINGERS
Risk sensitive banks were in demand, with Barclays <BARC.L>
one of the best off, 1.6 percent firmer, helped by Credit Suisse
repeating its "outperform" rating on the stock in a note on
European banks and new Liquidity Coverage Ratio regulations.
Investors seemed unfazed for now by news that Portuguese
Prime Minister Jose Socrates resigned on Wednesday and warned of
grave consequences for the country after parliament rejected his
government's latest austerity measures aimed at avoiding a
bailout.
Also, ratings agency Moody's downgraded its debt ratings of
30 Spanish banks by one or more notches. []
Analysts warned the European debt situation threatens to
undermine some confidence the market seems to have regained.
"I think shrugging aside the problems of European debt is a
mistake," Michael Hewson, an analyst at CMC Markets, said.
"Portugal will need a bailout, I think it's inevitable. And
I think if that happens, focus will then return to Spain; given
Moody's downgraded Spanish banks again, it means they're going
to find it harder and harder to raise money on the open market."
On the downside, engineer Invensys <ISYS.L> was the sharpest
FTSE 100 faller, off 4.8 percent, after it said Chief Executive
Ulf Henriksson has stepped down with immediate effect and has
been replaced by finance director Wayne Edmunds.
(Editing by Hans Peters)
