FTSE positive in choppy trade on rate cut talk

                                
 By Michael Taylor
                                
 LONDON, Jan 22 (Reuters) - Britain's leading shares reversed
earlier losses of over 4 percent on Tuesday as market talk of
rate cuts from central banks offered welcome respite from
worries over the health of the U.S. economy.
                                
 At 1131 GMT, the FTSE 100 <.FTSE> was up 6.6 points, or 0.1
percent, at 5,584.8, having earlier fallen to 5,338.7.
                                
 Tuesday's choppy UK trade follows on from a 5.5 percent drop
on Monday, the index's largest daily loss since Sept. 11, 2001,
wiping nearly 77 billion pounds off the value of the index's
constituent stocks.
                                
 Index futures for the S&P 500 <SPc1> also trimmed losses but
remained steeply lower, down 4.3 percent, as U.S. investors
prepared to resume trading after Monday's Martin Luther King Day
holiday.
                                
 "It's rumour central," said Mark Priest, a trader at
TradIndex. "We've heard rumours all morning. We've heard of a 75
basis point cut in the States (and) a co-ordinated cut by the
Bank of England, Federal Reserve and the European Central Bank,"
he added.
                                
 "It's crazy that these markets all opened down 250-300
points and within an hour they're in positive territory ... Rate
cuts are the only thing that are going to kick this market back
up."
                                
 The FTSE 100 has now shed over 13 percent so far in 2008.
The pan-European FTSEurofirst index <.FTEU3> is up 0.1
percent this session.
                                
 UK property stocks were among the notable gainers, thanks to
the talk of interest rate cuts.
                                
 Hammerson <HMSO.L> added 2.9 percent, Taylor Wimpey <TW.L>
was up 6.1 percent, British Land <BLND.L> climbed 4.2 percent,
and Land Securities Group <LAND.L> was 3.9 percent higher.
                                
 Banks and financials were also boosted by hopes on borrowing
cost cuts, with HBOS <HBOS.L> up 5 percent, Royal Bank of
Scotland <RBS.L> tacking on 3.5 percent and Schroders <SDR.L>
adding 6.7 percent.
 Also on the upside, Pearson <PSON.L>, the world's biggest
publisher of education materials, gained 5.7 percent after it
said it expected to post adjusted full-year earnings at or above
the top end of the range of current market expectations.
                                
 The London-based company said its education arm would report
its strongest year ever, while the publishing division covering
the Financial Times newspaper grew its subscription businesses
strongly, and its Penguin book-publishing business was
delivering continuing operating improvement. See [ID:nL22531050]
                                
 But miner BHP Billiton <BLT.L> fell before a trading
statement due at 2130 GMT.
                                
 The Wall Street Journal also reported late on Monday that
BHP was unlikely to raise its $130 billion unsolicited proposal
to buy mining rival Rio Tinto <RIO.L> by a Feb. 6 deadline.
                                
 BHP, which proposed a three-for-one share swap last
November, has until then to make a formal offer for Rio, or walk
away under a deadline imposed by the UK Takeover Panel. Rio
shares slipped 1.7 percent.
                                
 And as precious and base metal prices fell, other miners
suffered, with Xstrata <XTA.L> down about 1 percent, despite
Brazilian mining giant Vale saying on Monday that it was in
talks with its Anglo-Swiss rival about a takeover.
                                
 Pharmaceutical companies were also lower, with AstraZeneca
<AZN.L> down 2.3 percent after Citigroup cut its price target to
$49 from $50 with a "hold" rating.
                                
 WM Morrison Supermarkets <MRW.L> reversed losses to add 0.8
percent after it unveiled the best Christmas performance in the
sector, beating forecasts with a 9.5 percent rise in
like-for-like sales excluding fuel in the six weeks to Jan. 6.
See [ID:nL22512609]
                                
 "We haven't yet seen any companies that we invest in
reporting problems because of the economy," said Adam Steiner,
head of research at SVG Advisers. "There are certain sectors we
have avoided, like UK banks and retailers, which are clearly
having specific issues, but outside of the areas that are
obviously effected -- like the U.S. housing market -- there is
at this stage no evidence of problems.
                                
 "There has undoubtedly been a massive bubble in some markets
like China ... If we are heading for a global recession (the
FTSE 100 is) probably (going) another 30 percent down, if not it
may bounce in the summer and end the year up."
 (Additional reporting by Dominic Lau, Raissa Kasolowsky and
Rebekah Curtis, editing by Will Waterman)