Commodity stocks and banks drove gains on Britain's top share index early on Thursday as the focus switched away from fears on the euro zone debt crisis and investors hunted for bargains among recent heavily sold stocks, according to Reuters. By 0825 GMT, the FTSE 100 index was up 39.39 points, or 0.8 percent at 5,077.47, having closed 2 percent higher on Wednesday, though it is still down 12.5 percent since mid-April when fears about the euro zone debt crisis escalated. Investors took heart from comments from an official in China which allayed fears that the country may be distancing itself from euro zone debt holdings, calming fresh anxiety over the euro zone economy which had knocked U.S. stocks on Wednesday. The Financial Times reported on Wednesday that China was reviewing its euro zone debt holdings. Energy stocks were the biggest motor behind the blue chip gains, driving higher as crude rose above $72 per barrel. BG Group, Royal Dutch Shell, Tullow Oil, Cairn Energy gained 1 to 2 percent. BP was up 2.3 percent, though investors were braced for sharp moves in the stock as the oil giant faces a defining day in its five-week Gulf of Mexico oil spill disaster as its latest attempt to seal a gushing well deep underwater will be deemed either a success or a failure. "The big issue (for the market) is whether the fall has shaken out enough long positions so that people are prepared to start buying again," said Steven Bell, director at hedge fund GLC. "People are asking are corporate profits rising more than expected, is growth rising more than expected? Yes they are, and that equals a pro-risk view." MINERS STRONGER Miners were also strong gainers, lifted by firmer metal prices, and as Australia left open the possibility of watering down its proposed 40 percent mining tax on Thursday after newspapers said it was prepared to change the way the tax is calculated in order to pacify miners. Rio Tinto, Xstrata, Lonmin, Anglo American, Kazakhmys and BHP Billiton gained 1.5 to 2.9 percent. Among individual risers, hedge fund company Man Group was the top blue chip riser, up 2.5 percent after the company said client assets had stabilised after a year of outflows. Insurers Legal & General and Aviva added 2.2 and 3.3 percent respectively, boosted after Nomura upped its price targets on both, saying that it sees "remarkable value" in the two stocks. Invensys, by contrast, fell 0.6 percent after Nomura downgraded its rating for the engineering group to "neutral" from "buy" with a reduced target price of 310 pence, down from 320 pence, mainly on valuation grounds. On the economic front, the only significant domestic data due for release on Thursday was the May CBI distributive trades report, due at 1000 GMT.
