Strong banks led Britain's top share index higher by midday on Thursday, on upbeat investor sentiment ahead of European stress test results, while firmer commodity prices buoyed miners and energy stocks, according to Reuters. By 1104 GMT, the FTSE 100 was up 53.56 points, or 1.0 percent, at 5,268.20, having closed up 1.5 percent in the previous session. Banks provided the main strength for the blue chip index, with Lloyds Banking Group and Barclays the best off, adding 2.8 percent and 2.4 percent respectively. "Banks are doing okay. I think that's an expression of the fact that the UK banks and indeed many banks are expected to pass the stress tests quite easily tomorrow," said Peter Dixon, an economist at Commerzbank. The European Union examination of banks' financial strength is due on Friday and is expected to show generally positive results for Greece, Italy and Ireland and a few failures in Portugal and Spain. "It is slightly odd that markets have got such positive momentum behind them ahead of a big event, but I think it's indicative of the fact that markets think these stress tests aren't going to change the way they view the world," Dixon said. Buyers came in for the miners as metals prices rallied, with copper hitting its highest in nearly two months, lifted by a weaker dollar. Kazakhmys and Anglo American, were the best performers in the sector, both rising 2.3 percent. Energy stocks also notched up good gains, with BG Group and Royal Dutch Shell adding 0.7 percent and 1.2 percent respectively, while BP climbed 1 percent on building optimism about ending the worst oil spill in U.S. history. There was some positive economic data, as British retail sales volumes received a World Cup boost in June after strong sales of electrical goods drove a faster-than-expected 0.7 percent monthly rise, official data showed. But investors' underlying mood was still cautious following a downbeat assessment of the U.S. recovery by Federal Reserve Chairman Ben Bernanke on Wednesday. The Fed stands ready to ease monetary policy further if the budding U.S. economic recovery withers, Bernanke said, describing the outlook as "unusually uncertain". U.S. stock index futures pointed to a higher open on Wall Street following the previous session's steep losses after Bernanke's comments, as investors awaited weekly jobless claims, due at 1230 GMT, as well as the Conference Board leading indicators and existing home sales, both due at 1400 GMT. Investors were also looking ahead to the next batch of U.S. earnings, with Microsoft and Amazon.com among those reporting on Thursday. CAPITA CLIMBS Capita was the top FTSE 100 riser, up 5.4 percent, after the outsourcing group posted a 15 percent rise in first half profit and said it was seeing buoyant demand across the private and public sectors, strengthening its bidding pipeline. In reaction to the results, Evolution Securities upped its rating for Capita to "buy" from "add". Software firm Autonomy was the top FTSE 100 faller, down 12.5 percent after second-quarter earnings. "We estimate that after adjusting for one-offs, Autonomy failed to grow its core business in Q2 2010," KBC Peel Hunt said in a note, maintaining its "sell" rating. And Imperial Tobacco shed 2.3 percent after it said cigarette volumes fell 4.3 percent in the nine months to June.
