* Banks rally; Basel rules grace period report
* Miners, oils buoyed by rise in commodity prices
* Federal Reserve meeting outcome awaited
By Jon Hopkins
LONDON, Dec 16 (Reuters) - Britain's leading share index was
0.5 percent higher by midday on Wednesday supported by a rebound
from the banking sector, albeit in thin volumes, as investors
awaited news from the U.S. Federal Reserve policy meeting.
At 1137 GMT, the FTSE 100 <> was 26.66 points higher at
5,312.48, having closed 0.6 percent down at 5,285.77 on Tuesday.
"With volumes starting to thin, indices are more susceptible
to spikes and this is what we have seen today with the majority
of the small volumes looking to pick up equities from Tuesday's
weakness," said Joshua Raymond, market strategist at City Index.
The blue chip index is up 54 percent from a six-year low
touched in March, though it is still 1.6 percent below the level
in mid-September 2008 before the collapse of Lehman Brothers.
Banks bounced back after falls on Tuesday, following on
from gains by Asian peers on a report that the Basel Committee
on Banking Supervision has agreed effectively to delay
enforcement of new capital adequacy rules for major banks.
[]
"If true, this would save major banks from a potential rush
to top up their capital base and give them extra time to do so
in the manner they would prefer," Raymond said.
Barclays <BARC.L>, HSBC <HSBA.L>, Standard Chartered
<STAN.L>, and Lloyds Banking Group <LLOY.L> rose 0.4 percent to
1.9 percent, while Royal Bank of Scotland <RBS.L>, also helped
by a Citigroup target price hike, added 1.0 percent.
Life insurers also found gains, led by Resolution <RSL.L>,
up 3.4 percent. RSA Insurance <RSA.L>, Prudential <PRU.L>, and
Legal & General <LGEN.L> gained 0.8 to 5.5 percent.
Energy stocks were higher, also reversing the previous
session's falls, supported by firmer crude prices <CLc1>. BG
Group <BG.L>, Royal Dutch Shell <RDSa.L>, Cairn Energy <CNE.L>,
and Tullow Oil <TLW.L> added 0.4 to 1.4 percent.
Miners rallied too as metal prices recovered, with Rio Tinto
<RIO.L>, Xstrata <XTA.L>, Anglo American <AAL.L>, Lonmin <LMI.L>
and Kazakhmys <KAZ.L> up 1.0 to 1.6 percent.
Drugmakers were in demand. AstraZeneca <AZN.L> gained 1.1
percent after the U.S. Food and Drug Administration backed the
wider use of its cholesterol drug Crestor. []
GlaxoSmithKline <GSK.L> added 0.9 percent. Belgian pharma
group Galapagos <GLPG.BR> said it had broadened its arthritis
alliance with the company. []
Among individual movers, Rentokil Initial <RTO.L> was a big
blue-chip riser, up 3.4 percent, buoyed by a price target hike
from Deutsche Bank.
BEVERAGES RETREAT
Beverage firms retreated after good gains on Tuesday. Diageo
<DGE.L> shed 1.7 percent, as Deutsche Bank cut its rating on the
drinks company to "hold" from "buy" on valuation grounds. Brewer
SABMiller <SAB.L> lost 0.7 percent.
Other defensive issues also fell back as investors' risk
appetite returned. Tobacco stocks stood out, with Imperial
Tobacco <IMT.L> and British American Tobacco <BATS.L> down 0.8
and 0.2 percent, respectively.
Utilities also lost out, with International Power <IPR.L>
and Severn Trent <SVT.L> off 0.6 and 0.3 percent, respectively.
United Utilities <UU.L> went ex-dividend, taking 0.3 points
off the FTSE 100 index as the stock lost its payout attraction.
There was little market reaction to news that the number of
Britons claiming unemployment benefit fell unexpectedly in
November and for the first time in almost two years.
The Office for National Statistics said claimant count
unemployment fell by 6,300 last month, the first fall since 2008
and confounding expectations for a rise of 13,300.
[]
The U.S. Federal Reserve will conclude its two-day policy
meeting on Wednesday, with a statement due after the London
market closes.
The Fed was expected to stick to its super-loose monetary
policy stance as high unemployment constrains policy-makers'
enthusiasm about the economy's recent improvement.
(Editing by Karen Foster)
