* FTSE gains 0.9 percent
* Oils, miners gain on improved demand
* Banks recover on capital raising approvals
* Talk of further rate cuts helps sentiment
By Nick Vinocur
LONDON, Nov 21 (Reuters) - Britain's leading share index was
up 0.9 percent at midday on Friday, as talk of further interest
rate cuts eased worries about the financial sector, while miners
and oils gained on firmer commodity prices.
By 1207 GMT the FTSE 100 <> was up 34.11 points at
3,909.10, having ended down 130.69 points, or 3.3 percent, on
Thursday.
Wall Street futures pointed to a rebound from Thursday's
rout, when a frantic flight from risk drove the Standard &
Poor's 500 index to its lowest level since 1997.
Expectations of further monetary policy loosening by global
central banks helped bring a reprieve in the selling of
financial stocks.
"All the policy reactions are pretty good. If you look at
Libor and some other rates, it's (interest rate cuts) having
some effect, but it takes time, and we shouldn't expect instant
solutions to problems that have been building for some time,"
said Teun Draaisma, an equities strategist at Morgan Stanley.
But he warned that the fundamental outlook for equities
remained bleak, with corporate earnings in a downward spiral and
a global recession widely expected to keep markets depressed
well into 2009.
"We should stick to what we know, and the certainty is that
we are in a big global depression that will last quite a bit
longer," he added.
Oil and mining stocks led gains on the blue chip index
following a week of bruising losses in both sectors, as crude
prices recovered from 3-1/2 year lows and demand for raw
materials stabilised.
Energy stocks gained, with BP <BP.L> up 2 percent, BG Group
<BG.L> ahead 7.2 percent, and explorer Tullow Oil <TLW.L> 1.5
percent higher after it reported striking oil in Ghana.
Heavyweight miners also gave a boost to the index,
recovering after recent sharp falls on bargain-hunting.
Antofagasta <ANTO.L> jumped 15 percent, topping the list of
FTSE 100 gainers, Xstrata <XTA.L> gained 8.7 percent, BHP
Billiton <BLT.L> rose 10.5 percent, and Anglo American <AAL.L>
added 10.4 percent.
BANKS RECOVER
U.S. giant Citigroup <C.N> is considering selling itself
after the recent plunge in its share price, the online edition
of the Wall Street Journal said.
Royal Bank of Scotland <RBS.L> gained 3.9 percent, with its
shareholders having approved plans for a government bailout on
Thursday.
Barclays <BARC.L>, which will see its shareholders vote on
capital raising plans next week, rose 4.9 percent, while HSBC
<HSBA.L> added 1.3 percent, and HBOS <HBOS.L> put on 2.1
percent.
Defensive stocks, which tend to underperform in rising
markets, were under pressure. Heavyweights AstraZeneca <AZN.L>
and GlaxoSmithKline <GSK.L> slid 4.2 and 3.6 percent.
National Grid <NG.L> fell 3.3 percent, retreating from
Thursday's gains after its well-received first-half results, as
HSBC cut its rating to "neutral" from "overweight".
Water group Severn Trent <SVT.L> lost 4.3 percent, extending
weakness from Thursday's downgrade by Merrill Lynch.
Defensive tobacco stocks were out of favour, with British
American Tobacco <BATS.L> down 1.7 percent, and Imperial Tobacco
<IMT.L> off 1.4 percent. UBS cut its price target for Imperial
Tobacco to 1,700 pence from 1.945.
(Reporting by Nicholas Vinocur, editing by Will Waterman)
