By Michael Taylor
LONDON, April 16 (Reuters) - Britain's top shares clung onto
earlier gains in volatile trade on Wednesday as banks were
buoyed by signs the Bank of England was close to finalising the
terms for mortgage intervention, and bid talk and metal prices
boosted miners.
At 1031 GMT the FTSE 100 <> was up 40.1 points, or 0.7
percent at 5,947.0 after touching a high of 5,964.6.
Banks rose after the Financial Times said the UK central
bank was close to finalising the terms for an intervention in
the mortgage market.
The newspaper, citing people familiar with the proposal,
said the plan would see the Bank of England swap UK
mortgage-backed securities for government loans for a period of
one to three years. []
Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, HBOS
<HBOS.L>, HSBC <HSBA.L>, Lloyds TSB <LLOY.L> and Alliance &
Leicester <ALLL.L> were up between 0.2 and 3.6 percent.
"Supporting is the banks, which have come back to life ahead
of the U.S. earnings," said Jawaid Afsar, a trader at
Securequity in Sheffield. "People are optimistic that while a
lot of the bad news is still to come through, much of it is
priced in."
"That (BoE plan) may also be spurring it because the banks
have certainly had a raw deal over the past few months."
Among other sectors, Rio Tinto <RIO.L> rose 3.4 percent to
feature among the leading blue-chip gainers, as traders cited
talk of an increased bid from rival BHP Billiton <BLT.L>
<BHP.AX>.
BHP, whose shares gained 1.9 percent, declined to comment,
while Rio <RIO.AX> was not immediately available for comment.
Rio has rejected BHP's proposed 3.4 shares for one share
swap, preferring to ride the mineral boom on its own.
Rio also posted a mixed first-quarter production report and
said it is racing to meet rising global commodities demand,
brushing aside fears that a U.S. recession would damage the
mining sector.
Climbing metal prices also supported the sector, said
traders, with Lonmin <LMI.L, Xstrata <XTA.L>, Vedanta <VED.L>
and Anglo American <AAL.L> up between 1.2 and 3.6 percent.
In other gainers, credit information provider Experian
<EXPN.L> leapt 9 percent after it said second-half sales rose 2
percent, slightly ahead of forecasts.
JPMorgan's <JPM.N> first-quarter earnings will provide
further market direction later and offer some clarity on the
strength of U.S. banks amid the credit crisis.
The Wall Street Journal quoted a person familiar with the
matter as saying on Wednesday that Merrill Lynch <MER.N> would
announce a further $6 billion to $8 billion of asset writedowns
in its quarterly results on Thursday.
"In order to say that we are out of the woods, the FTSE has
to break above 6,000 points," said Securequity's Afsar. "Why the
market is where it is at the present time, I'm struggling to
come up with any valid reasons."
Investors will also look to U.S. consumer inflation and
housing starts data due at 1230 GMT for further clues of the
health of the world's biggest economy.
In Britain, about 25 billion pounds of consumer debt was
"problem debt" that people were struggling to repay, the
Financial Times said, quoting a new study by TDX Group, a
provider of debt management.
SLICK OILS
Oil stocks edged higher as U.S. crude <CLc1> hit a new high
above $114 a barrel. BP <BP.L> tacked on 0.3 percent while rival
Shell <RDSa.L> climbed 0.9 percent.
On the downside, shares in Britain's third-largest life
insurer Legal & General <LGEN.L> slipped 4.6 percent to top FTSE
100 losers as traders pointed to disappointment at their first
quarter results and the stock trading ex-dividend.
L&G posted broadly flat first-quarter sales, beating
expectations as growth in corporate annuities and a tie-up with
building society Nationwide offset weakening market conditions.
BAE Systems <BAES.L>, Friends Provident <FP.L>, Kingfisher
<KGF.L> and Smith & Nephew <SN.L> all fell after going
ex-dividend.
(Additional reporting by Dominic Lau; Editing by Quentin Bryar)
