By Rebekah Curtis
LONDON, April 1 (Reuters) - Britain's FTSE 100 rallied into
the second quarter on Tuesday, led by banks as a $19 billion
writedown from Swiss bank UBS gave the stricken sector some of
the visibility it has craved in a rolling credit crisis.
By 1032 GMT the FTSE 100 <> was up 42 points, or 0.7
percent at 5744.1. The index rose on Monday but still sealed its
worst quarterly performance in more than five years, declining
11.7 percent in the first three months.
UBS <UBSN.VX> shares gained after it doubled its writedowns
from the subprime crisis, parted company with its chairman and
asked shareholders for more emergency capital on Tuesday in a
second dramatic attempt to reverse its fortunes.
All UK banks rose, with Barclays <BARC.L>, Royal Bank of
Scotland <RBS.L> and Alliance & Leicester <ALLL.L> up between 4
and 5 percent each.
"UBS's profit warning does not come as a surprise given its
sizeable higher risk positions and challenging market
conditions.... On a positive note, the bank will remain well
capitalised after a fully underwritten rights issue, but it is
worrying that contagion effects are taking place in the Global
Asset Management operations," Dresdner said in a note.
U.S. stock futures pointed to a higher open, while in Asia
Japan's Nikkei average <> rose 1.4 percent.
On the economic agenda, investors will eye the U.S.
Institute for Supply Management's March manufacturing PMI index,
due at 1400 GMT.
"ISM manufacturing data will be under scrutiny as investors
look to ascertain a clearer picture with regards to the state of
the U.S. economy as recessionary fears continue to rattle the
nerves of investors," said Nick Mitchell, a dealer at CMC
Markets.
Shares in Friends Provident <FP.L> surged 5.7 percent to
lead the index on hopes of more bid approaches, extending gains
from the previous session when it rejected a bid offer from U.S.
private equity firm JC Flowers.
AstraZeneca <AZN.L> extended gains for a second day, jumping
4.9 percent on growing optimism its Crestor drug will benefit
from turmoil in the anti-cholesterol market. JP Morgan analysts
upgraded the stock to "neutral" from "underweight".
OIL SLIPS
But energy shares weighed as U.S. crude oil fell to near
$101 on selling by funds and a strengthening U.S. dollar.
Royal Dutch Shell <RDSa.L> dropped 1 percent and rival BP
<BP.L> shed 1.8 percent. BP was also hurt by JPMorgan cutting
its target price to 600p pence from 650 pence. Tullow Oil
<TLW.L> and BG Group <BG.L> also fell.
Mining shares all traded in the red as gold and copper
prices fell. Rio Tinto <RIO.L> shed 2.5 percent and Xstrata
<XTA.L> dropped 3.3 percent.
National Grid <NG.L> added 1.9 percent after TransCanada
<TRP.TO>, a North American energy pipeline company expanding its
power generation business, said it agreed to buy a large New
York City power plant from National Grid for $2.8 billion, plus
other adjustments at closing. []
Meanwhile, UK construction activity fell to its lowest level
since 1996 in the first three months of 2008 and is expected to
fall further in the second quarter, the Royal Institution of
Chartered Surveyors said.
(Additional reporting by Ben Hirschler; editing by Elaine
Hardcastle)
