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* Banks rally on Obama's State of the Union address
* AstraZeneca update misses forecasts, hitting peers
By David Brett
LONDON, Jan 28 (Reuters) - Britain's top share index gained
0.1 percent by midday on Thursday, as banks reacted firmly to
the U.S. president's State of the Union address, outpacing falls
in drugmakers after AstraZeneca's update.
By 1154 GMT, the FTSE 100 <> was up 6.1 points at
5,223.57, taking its cue from gains on Wall Street and in Asia
overnight, after the index finished down 1.1 percent on
Wednesday, its lowest close since Dec. 18.
Analysts said investors were relieved Barack Obama's speech
did not slam banks and Wall Street anew and, while the Federal
Reserve's decision to keep interest rates near zero was not
surprising, the somewhat more optimistic tone of its statement
did reassure markets. []
Banks, which have been hit on fears the punitive measures
threatened in the U.S. could be imposed here and after downbeat
results from peers in the U.S. and Europe, rallied strongly
following Obama's address.
Barclays <BARC.L>, HSBC <HSBA.L>, Royal Bank of Scotland
<RBS.L>, Standard Chartered <STAN.L> and Lloyds Banking Group
<LLOY.L> climbed 0.3 to 3.4 percent.
Other financials were also in demand. Life insurers, which
have been the subject of months of consolidation speculation,
were good gainers.
Aviva <AV.L>, Old Mutual <OML.L> and Legal & General
<LGEN.L> added 0.5 to 1.7 percent.
Miners rebounded following the previous session's weakness.
Fresnillo <FRES.L>, Xstrata <XTA.L> and Anglo American <AAL.L>
added 0.4 to 1.3 percent.
The world's third-biggest platinum producer Lonmin <LMI.L>
gained 0.9 percent and Kazakhmys <KAZ.L> rose 1.1 percent after
their respective updates.
British pay-TV firm BSkyB <BSY.L> rose 0.7 percent after the
firm reported net new customers at the end the second quarter at
the top end of expectations, as its hugely popular high
definition service pulled in new subscribers. []
British private equity firm 3i Group Plc <III.L> was 0.9
percent higher after the company said it started 2010 in a
strong financial position, building on the performance of the
previous quarter. []
Security services group G4S <GFS.L> is a top riser, up 1.8
percent after RBS started its coverage of the company with "buy"
recommendation.
DRUGMAKERS RETREAT
Pharmaceutical issues were weaker in mid-session trade as
AstraZeneca's <AZN.L> fourth quarter update missed expectations.
The Anglo-Swedish drugmaker fell 3.4 percent after it posted
earnings per share of $1.42 against the mean consensus forecast
of $1.57 according to Thomson Reuters I/B/E/S/. []
Shire <SHP.L> dipped 0.2 percent.
"The rally has run out of steam as the morning has gone on,"
said Richard Hunter, head of equities at Hargreaves Lansdown.
"Obama's reforms and China monetary tightening are still
hanging in the background. The keyword remains caution."
Energy stocks were mixed, with crude creeping above $74 a
barrel, as fears over China's heightened efforts to rein in
soaring credit growth still hanging over the sector.
Royal Dutch Shell <RDSa.L> and BP <BP.L> slipped 0.6 percent
and 0.2 percent respectively.
However, BG Group <BG.L> was up 0.7 percent, while oil
explorer Tullow Oil <TLW.L> rose 2.3 percent, and Cairn Energy
<CNE.L> gained 0.4 percent following its trading update.
Defensive issues sagged as risk appetite among investors
returned. British American Tobacco <BATS.L> and Imperial Tobacco
<IMT.L> fell 0.7 percent each, while Centrica <CNA.L> and
Scottish and Southern Energy <SSE.L> both dropped 0.1 percent.
Investor attention will be drawn to U.S. data including
durable goods, the latest weekly jobless claims, and the Chicago
Fed index -- all due at 1330 GMT.
(Editing by Sharon Lindores)
