By Chloe Fussell
LONDON, Feb 1 (Reuters) - Britain's leading share index was
up two percent on Friday, tracking gains on Wall Street
overnight and as M&A activity buoyed miners.
At 1139 GMT the FTSE 100 <> was 120.7 points higher at
6,000.5, ahead of U.S. jobs data due at 1330 GMT.
Miners featured on the upside, after a Chinese group teamed
up with U.S. aluminium producer Alcoa <AA.N> to buy 12 percent
of Rio Tinto <RIO.L>. Rio shares jumped 14 percent.
The move comes days ahead of a deadline for BHP Billiton
<BLT.L>, the world's biggest miner, to make a firm offer for Rio
Tinto or to drop its proposed takeover, which has so far been
resisted by Rio.
BHP tacked on 10 percent, while Antofagasta <ANTO.L> climbed
7.7 percent, Vedanta <VED.L> gained 6.2 percent and Kazakhmys
<KAZ.L> was 5.5 percent higher.
The U.S. jobs data will give further evidence on the state
of the world's largest economy and the likelihood of a
recession. A Reuters poll gives a median forecast for a rise of
80,000 jobs for January.
Overnight, U.S. stocks rose after a major bond insurer
reassured investors about its stability, fuelling a rebound by
financial shares hammered by fears that the fallout from
crumbling credit markets was spreading ever wider.
"(Employment) is pretty volatile at this time of year as so
much of it is seasonal," said analyst Richard Hunter at
Hargreaves Lansdown. "But I think the best we can hope for is
something that doesn't give the market too much of a shock and
basically undo yesterday's good work."
The FTSE 100 rose 0.7 percent on Thursday after suffering
heavy new year losses as stock markets fell globally over fears
of a possible U.S. recession.
WORRIES FOR BA
Among companies reporting, British Airways <BAY.L> fell 4.5
percent on worries over its longhaul premium travel business in
the light of weakness in financial markets, despite the
airline's statement that traffic remains strong.
BA also said non-premium bookings fell in January compared
to last year, although it reported a 28.5 percent rise in
operating profit to 734 million pounds for the first nine months
of its financial year, compared with an average analyst forecast
of 737 million.
A note from Credit Suisse raising the UK real estate sector
to "overweight" from "market weight" and falling interest rates
bolstered housebuilders Taylor Wimpey <TW.L>, which gained 8.4
percent and Persimmon <PSN.L> 3.2 percent.
The market has fully discounted a quarter-point interest rate
cut from the Bank of England when it meets next week, and is
pricing in a one-in-three chance of a half percentage point
reduction
Shares in British Land Company <BLND.L> slid 2 percent as
Credit Suisse cut its rating for the property investment company
to "neutral" from "outperform" and lowered its price target to
11.73 pounds from 16.03 pounds. Real estate investment trust
Segro added 2.2 percent as Credit Suisse raised its rating to
"outperform".
In banking shares, HSBC <HSBA.L> added 0.8 percent after it
appointed Vincent Cheng Hoi Chuen, the chairman of its China and
Asia operations, to its board as an executive director,
effective from Friday. See []
"We are keeping a close eye on the banks as we run into the
big five reporting season -- it's a couple of weeks away but
quite apart from the numbers themselves you are going to get
speculation about what those numbers might contain the nearer we
get to the season," said Hunter.
Among retailers, Tesco <TSCO.L> was flat after The Times
reported that rival Asda, owned by Wal-Mart <WMT.N>, was
planning to put more than 750,000 non-food products online from
summer under its Asda Direct Service.
The newspaper said the move was designed to generate one
billion pounds of online sales by 2011, a fivefold increase that
would help to close the gap between the company and Tesco.
British pub firm and brewer Greene King <GNK.L> gained 3.2
percent, despite warning of slowing sales and a tough year
ahead, as it said it remained confident of meeting analysts'
forecasts.
(Additional reporting by Michael Taylor; editing by Rory
Channingb)
