* FTSE 100 gains 1.7 percent, hits highest since June 2008
* Banks, miners gain as Fed's QE boosts confidence
* Unilever gains, Wm Morrison falls on corporate news
* BoE, ECB rate decisions awaited
By Simon Falush
LONDON, Nov 4 (Reuters) - Firmer banks and mining stocks
lifted Britain's top share index to its highest in nearly 2-1/2
years on Thursday as a move by the U.S. Federal Reserve to buy
assets boosted investor confidence in equities.
By 1110 GMT the FTSE 100 <> was up 97.12 points or 1.7
percent at 5,846.09, reaching its highest since June 2008 after
it closed 0.2 percent lower on Wednesday.
Financial stocks were among the strongest gainers. Man Group
<EMG.L> was the star performer, up 7.8 percent after the world's
largest listed hedge fund firm said client assets rose to $40.5
billion at end-September after eight months of outflows.
Banks provided much of the index's strength, with HSBC
<HSBA.L> and Lloyds Banking Group <LLOY.L> adding 3.4 and 2.4
percent respectively.
The Fed launched a fresh effort to support the U.S. economic
recovery, committing to buy $600 billion in government bonds
which lifted riskier assets around the world despite concerns
the programme could do more harm than good. []
"There's been impetus from quantitative easing,
third-quarter earnings have been much better than expected, and
there are no storm clouds on the horizon until the austerity
package starts to bite," said David Buik, senior partner at BGC
Partners.
He said that the index would be at 6,000 by the end of the
year, but would retreat to 5,600 by April as the harsh economic
environment starts to take its toll.
Investors were waiting for Bank of England decisions on
interest rates and quantitative easing (QE) due at 1200 GMT.
The BoE is likely to reject a new bout of QE, keeping policy
on hold and eschewing the Fed's path of more economic stimulus.
[]
Supporting the argument that further QE is not needed in the
UK, British house prices rose by 1.8 percent last month, three
times faster than expected. []
The European Central Bank, which also announces a rate
decision, is set to keep its key rate unchanged at 1 percent.
[]
The dollar index <.DXY> fell to an 11-month low and the
greenback fell to its lowest in 28 years versus the Australian
dollar <AUD=>, helping lift the price of metal and crude <CLc1>
which supported mining and energy stocks.
Xstrata <XTA.L> added 4.7 percent and Rio Tinto <RIO.L>
gained 3.8 percent while Royal Dutch Shell <RDSa.L> rose 1.7
percent.
CORPORATE STRENGTH
Though macroeconomic factors dominated, there was plenty of
corporate news for investors to digest. Unilever <ULVR.L> jumped
5.5 percent after the consumer goods group matched forecasts
with a 3.6 percent rise in third-quarter sales.
Wm Morrison Supermarkets <MRW.L> was a feature among a small
list of blue-chip fallers, down 2.5 percent after it posted a
1.3 percent rise in underlying sales and warned shoppers were
likely to remain under pressure into the second half of 2011.
Rolls Royce <RR.L> fell 3.6 percent after Qantas Airways
suspended flights of its Airbus A380 fleet after engine failure
triggered an emergency landing in Singapore. Qantas A380s use
Rolls-Royce Trent 900 engines. []
Now that the index has broken through resistance around the
5,833 level, the 5,930 level -- which is a 75 percent
retracement of the drop from December 2007 to 2009's low -- will
be watched, said Nicole Elliott, technical analyst at Mizuho
Corporate Bank.
She said after this a cluster of resistance levels around
6,000 will be watched.
(Editing by Michael Shields)
