* FTSE 100 gains 1.1 pct
* Banks charge forward as European peers ease worries
* Patent ruling gives fillip to Astra/drugmakers
By Michael Taylor
LONDON, July 2 (Reuters) - Britain's FTSE 100 <>
extended early gains to climb 1.1 percent at midday on
Wednesday, as European banks rebounded and AstraZeneca <AZN.L>
buoyed drugmakers, while Marks & Spencer <MKS.L> fell.
At 1047 GMT, the UK's blue-chip index was up 61.3 points at
5,541.2 after falling 2.6 percent and touching a three-month low
in the previous session.
Banks rebounded from a recent sharp sell-off as UBS
<UBSN.VX> and Deutsche Bank <DBKGn.DE> said they don't need to
raise extra cash, calming fears that more big writedowns and
slowing economies could force further capital raisings.
HSBC <HSBA.L>, Lloyds TSB <LLOY.L> and Royal Bank of
Scotland <RBS.L> added 0.5 to 2.5 percent, while the DJ Stoxx
European bank index <.SX7P> rallied 2.1 percent.
Barclays <BARC.L> tacked on 3.4 percent after Cazenove said
the bank has raised enough capital to support its growth plans
and reiterated its "outperform" stance.
AstraZeneca gained 5.6 percent to top the gainers after the
group won a key U.S. patent battle over its second-biggest
selling drug, Seroquel, for schizophrenia and bipolar disorder.
[]
Rival heavyweights GlaxoSmithKline <GSK.L> and Shire <SHP.L>
were up 2.5 to 4 percent.
"It is ridiculous," said David Jones, chief market
strategist at IG Index. "Last night it looked like the end of
the world -- it's just the uplift we saw in the second half of
the U.S. session last night has helped."
"Some of the 'safer' stocks are doing well," he added. "The
only concern is the fact that U.S. markets are still incredibly
weak is a big worry. If the markets are going to bounce we need
to now see no more real weakness."
M&S LOSES SPARK
Among decliners, retailer Marks and Spencer fell around 20
percent after it issued a shock profit warning and said a
consumer downturn was likely to be deeper, and last longer, than
previously expected. []
Other retailers in the red included Next <NXT.L>, Kingfisher
<KGF.L>, Sainsbury <SBRY.L> and Tesco <TSCO.L>.
Leeds-based company Northern Foods <NFDS.L>, which makes
sandwiches and ready meals for M&S, slipped 7 percent.
FTSE 250 <> listed Taylor Wimpey <TW.L> pulled the
housebuilding sector lower, plunging 53.8 percent after it said
the UK housing market would remain weak at least through 2008
and that it had not been able to conclude a satisfactory raising
of equity due to market conditions. []
Peers Barratt Developments <BDEV.L>, Persimmon <PSN.L>,
Wolseley <WOS.L>, Bovis Homes Group <BVS.L> and Bellway <BWY.L>
lost between 6 and 29.5 percent.
"The overall global market is likely to continue to decline
and obviously the UK is not going to be immune from that," said
Peter Dixon, UK economist at Commerzbank. "It's very hard to see
what's going to give the market much of a lift in the next few
months."
"Because consumers are facing a squeeze on incomes, because
retailers are facing a rise in costs, then obviously they can't
easily cut costs to maintain volumes. It's a difficult
situation."
Firmer metal prices pushed heavyweight mining shares higher,
with BHP Billiton <BLT.L>, Kazakhmys <KAZ.L>, Vedanta <VED.L>,
Rio Tinto <RIO.L> and Xstrata <XTA.L> adding 2.4 to 2.9 percent.
Among other midcaps, British events organiser and publisher
Informa <INF.L> was 12 percent higher after it said it is
considering a 2.15 billion pound ($4.3 billion) bid approach
from a consortium of private equity firms.
In economic news, market participants began to switch their
attentions towards Thursday's U.S. non-farm payroll numbers for
further clues on the health of the world's biggest economy.
(Additional reporting by Dominic Lau, Atul Prakash, Patrizia
Kokot and Rebekah Curtis; Editing by Erica Billingham)
