FTSE rises 2.4% as commodities, banks soar

Wed Apr 16, 2008 10:13pm IST

[-] Text [+]

By Michael Taylor

LONDON, April 16 (Reuters) - Britain's blue-chip index rose by more than 2 percent on Wednesday to its highest close in six weeks as rising commodity prices boosted miners, while banks got a lift from a JPMorgan (JPM.N: Quote, Profile, Research) update that eased investors' fears.

The FTSE 100 .FTSE ended up 139.3 points, or 2.4 percent, at 6,046.2, closing above 6,000 for the second time since late February.

Commodity stocks tracked higher oil and metals prices, with Lonmin (LMI.L: Quote, Profile, Research), Xstrata (XTA.L: Quote, Profile, Research), Vedanta (VED.L: Quote, Profile, Research) and Eurasian Natural Resources (ENRC.L: Quote, Profile, Research) up between 3.5 and 6.4 percent. Rio Tinto (RIO.L: Quote, Profile, Research) rose 6 percent on market talk that BHP Billiton (BLT.L: Quote, Profile, Research) might raise its offer for the world's second biggest miner. BHP, whose shares gained 5.4 percent, and Rio declined to comment.

Rio also posted a mixed first-quarter production report and said it was racing to meet rising global commodities demand, brushing aside fears that a U.S. recession would damage the mining sector.

Heavyweight oil shares rose as U.S. crude CLc1 touched a record high of $114.95 a barrel and U.S. crude stocks fell 2.3 million barrels.

BP (BP.L: Quote, Profile, Research), Royal Dutch Shell (RDSa.L: Quote, Profile, Research) and Cairn Energy (CNE.L: Quote, Profile, Research) rose 2.1-4.7 percent.

In other high-performing blue-chip sectors, banks extended earlier gains as British authorities, under pressure to ease strains in the mortgage market, considered a scheme that would allow lenders to swap mortgage collateral for government bonds, a source close to the matter said. [ID:nL16313373]

Barclays (BARC.L: Quote, Profile, Research), Royal Bank of Scotland (RBS.L: Quote, Profile, Research), HBOS (HBOS.L: Quote, Profile, Research), HSBC (HSBA.L: Quote, Profile, Research), Lloyds TSB (LLOY.L: Quote, Profile, Research) and Alliance & Leicester (ALLL.L: Quote, Profile, Research) were up between 3.5 and 7.6 percent. Continued...