Banks and oils lead FTSE to close up

By Dominic Lau Reuters - Friday, April 25 05:08 pm

LONDON (Reuters) - The top share index ended up 0.7 percent on Friday as optimism that banks had seen the worst of credit-related writedowns lifted the sector and oil stocks tracked higher crude prices.

The FTSE 100 closed up 40.7 points at 6,091.4, for a weekly gain of 0.5 percent. The blue-chip index underperformed Frankfurt's DAX and Paris's CAC-40 .

"It has been quite encouraging. It had a volatile week but held on to gains made from last week of above 6,000," said Angus Campbell, head of sales at Capital Spreads.

"We really need to see the market push beyond 6,100. We have seen a few sellers at that level. If we don't get a concerted effort above that, it would just prove the downward trend is still intact," he said.

Beaten-down banks were the top sectoral gainer, with HBOS , HSBC , Barclays , Royal Bank of Scotland , Alliance & Leicester and Lloyds TSB up between 0.5 and 4.4 percent.

UBS said in a report that it had upgraded the global banking sector to "neutral", citing improvements in credit markets, increased government intervention, a near-end to mark-to-market writedowns and fundraising by banks.

Also in the financial sector, ICAP and London Stock Exchange put on 4.1 and 3.6 percent respectively.

Oil shares turned positive as crude prices <CLc1> traded just above $119 a barrel after reports that a ship contracted by the U.S. military fired at least one warning shot toward an Iranian boat.

BP tacked on 0.9 percent, Royal Dutch Shell gained 0.4 percent and BG Group climbed 2.3 percent.

Shire sank 4.3 percent after the drugmaker said that 2008 sales of its biggest drug hope, Vyvanse -- for attention deficit hyperactivity disorder (ADHD) -- were likely to be at the lower end of its forecasts.

GlaxoSmithKline , however, advanced 1.3 percent after European drug regulators recommended approval of its new breast cancer pill Tykerb, or Tyverb, but with additional warnings about potential liver toxicity, late on Thursday.

WRONG MESSAGE AT WPP

WPP Group was the heaviest casualty in the FTSE 100, down 6 percent, after the world's second-largest advertising firm reported first-quarter like-for-like revenue growth towards the low end of forecasts.

Also in the media sector, ITV fell 1.5 percent after Morgan Stanley cut its price target with an "underweight" rating on concern that the UK display advertising environment had suddenly deteriorated.

Miners were mixed, with Antofagasta , Kazakhmys and Anglo American off 0.8 to 3.3 percent. Rio Tinto , Xstrata and BHP Billiton rose.

Carphone Warehouse added 3.2 percent, making it one of the top gainers, after Morgan Stanley lifted its rating on the stock to "overweight" from "equal weight".

Traders said persistent bid speculation was also boosting the shares. Carphone declined to comment.

Bus and train operator FirstGroup rose 4.7 percent after peer Go-Ahead Group said trading for the third quarter of its financial year was strong and it expected to deliver a full-year performance in line with its expectations.

Go-Ahead jumped more than 14 percent.

Reckitt Benckiser slipped 1.9 percent, after gaining more than 7 percent in the previous session after it beat first-quarter forecasts and nudged up its full-year targets.

Housebuilder Barratt Developments fell 5.9 percent on lingering market talk of a rights issue, extending the previous session's 11 percent loss. The company said it cannot comment on market speculation.

(Additional reporting by Michael Taylor; Editing by David Hulmes)

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