* FTSE 100 rises 1.4 pct
* Beaten-down banks rebound after Fed boosts sentiment
* Gold rises on Iran missile test, boosting miners
By Dominic Lau
LONDON, July 9 (Reuters) - Britain's top share index was up
1.4 percent by midday on Wednesday, as beaten-down banks
rebounded on positive comments from the U.S. Federal Reserve
chairman, while miners tracked higher metal prices.
By 1032 GMT, the FTSE 100 <> was up 74.4 points at
5,514.9 after falling 1.3 percent on Tuesday. The UK benchmark
index has fallen 14.6 percent so far this year, and against that
backdrop some analysts were unimpressed by Wednesday's rise.
"Equity markets are reacting to the likelihood of recession.
The U.S. economy is verging on recession and, as for the UK, a
recession may be under way already," said Mike Lenhoff, chief
market strategist at Brewin Dolphin.
"Interest rates and oil prices need to come down before
confidence in equity markets returns," he said, cutting his
year-end target for the FTSE 100 to 6,200 from 7,200.
Banks were the top sectoral gainer, adding 28 points to the
index after Fed Chairman Ben Bernanke said on Tuesday that the
U.S. central bank may keep an emergency lending facility for big
Wall Street banks open longer than it initially intended.
Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, HSBC
<HSBA.L>, HBOS <HBOS.L>, Lloyds TSB <LLOY.L> and Standard
Chartered <STAN.L> advanced between 1.5 and 6.6 percent.
Mid-cap Bradford & Bingley <BB.L>, which has been battered
by concerns over its future and the impact of a deteriorating UK
economy, bounced 6.6 percent.
The Bank of England began a two-day rate-setting policy
meeting and will announce its verdict on Thursday. Analysts
expect the central bank to leave rates unchanged at 5 percent.
Miners tracked higher metal prices, with gold <XAU=> trading
higher after news that Iran had test-fired nine long-range and
medium-range missiles.
BHP Billiton <BLT.L>, Rio Tinto <RIO.L>, Vedanta Resources
<VED.L>, Anglo American <AAL.L>, Antofagasta <ANTO.L>, Eurasian
Natural Resources <ENRC.L>, Ferrexpo <FXPO.L> and Xstrata
<XTA.L> were all up between 0.6 and 3.1 percent.
Within the commodity sector, Tullow Oil <TLW.L> added 2.1
percent after the oil explorer gave an optimistic outlook for
reserves and for the production start-up at its main Ghana field
and disclosed another discovery in Uganda.
London Stock Exchange <LSE.L> jumped 11 percent, recovering
some recent lost ground after the company said its revenue for
the first quarter rose 8 per cent to 178 million pounds.
WPP UNDER PRESSURE
WPP Group <WPP.L>, however, led the losers on the FTSE 100,
down 3 percent after the world's second-largest advertising
company launched a hostile bid worth 1.08 billion pounds ($2.13
billion) for British market research firm Taylor Nelson Sofres
<TNS.L>, which was up over 5 percent.
Housebuilders, which are mostly listed on the mid-cap FTSE
250 <>, also gained with a broader market rebound, with
Barratt Development <BDEV.L> soaring 24 percent and Redrow
<RDW.L> surging 13 percent. But analysts said the sector
remained under pressure.
"The picture across the housebuilding sector is bleak," said
Keith Bowman, equity analyst at Hargreaves Lansdown.
"Sales revenues have taken a dramatic downturn, whilst the
overall financial picture is further complicated by the need for
just about all the builders to write down the value of
previously purchased land," he said in a note.
Bovis Homes <BVS.L>, whose shares rose 3 percent, said it
planned to cut staff by 40 percent and slash its dividend to
cope with a dire housing market. Redrow said its 2007-08 trading
results would meet forecasts, but it was also cutting 40 percent
of jobs.
(Additional reporting by Atul Prakash, editing by Will
Waterman)
