(The market will close on Tuesday, Dec. 25 for Christmas and on
Wednesday, Dec. 26. It will reopen on Thursday, Dec. 27.)
By Ana Nicolaci da Costa
LONDON, Dec 24 (Reuters) - Britain's top share index rose on
Monday in a shortened Christmas Eve trading session as banks,
battered recently, regained ground and as generally firmer raw
materials prices lifted commodity shares.
The FTSE 100 <.FTSE> closed up 45.2 points, or 0.7 percent,
at 6,479.3 after gaining 0.6 percent last week. Activity was
light ahead of the Christmas holiday, with volume on the FTSE
just over 10 percent of the average for a full day's trade in
the last 30 days.
The market will reopen on Thursday.
The UK blue-chip index has gained 4.2 percent so far this
year, putting it on track to record its worst yearly performance
since the bull run began four years ago.
Banks were the top performers on Monday, contributing more
than 13 points to the index.
Barclays <BARC.L> rose 2.4 percent, Royal Bank of Scotland
<RBS.L> was up 1.8 percent, Standard Chartered <STAN.L> advanced
1.4 percent, and Lloyds TSB <LLOY.L> gained 1.1 percent.
A recent bout of central bank injection in money markets was
providing a stock-friendly backdrop, analysts said, especially
at a time when several sovereign wealth funds in Asia are buying
stakes in western banks, such as Citigroup <C.N>, UBS <UBSN.VX>
and Bear Stearns <BSC.N>.
The Financial Times reported Saudi Arabia plans to establish
a sovereign wealth fund that may exceed $900 billion, which
would likely be the largest in the world.
Analysts said the fact that the interbank market rate had
come down quite significantly was also helping.
"People were saying there is no trust in the banking system,
they are not lending or borrowing from each other, so therefore
we have got a credit crunch," said Edward Menashy at Charles
Stanley.
"I think the fact that the rate has come down fairly
dramatically, that has changed this scene because it shows that
the latest involvement of the central banks is meeting with a
degree of success."
Three-month sterling libor <GBP3MD=> was at 5.98 percent,
near its lowest level since before the credit crisis worsened in
August.
Stocks rose despite comments from European Central Bank
President Jean-Claude Trichet reiterating the ECB's stance on
inflation.
The bank is determined to stop increases in oil and food
prices becoming entrenched in a broader inflation rise, Trichet
said in an interview with the Financial Times published Monday.
NORTHERN ROCK
Northern Rock <NRK.L> -- which falls out of the blue-chip
FTSE 100 this session -- rose 0.6 percent. The Sunday Times said
the board of the embattled bank was considering mounting a
rescue plan to save the lender from nationalisation or takeover.
Miners benefited from generally higher base metal prices,
also helping the index.
Rio Tinto <RIO.L>, a target of BHP Billiton <BLT.L>, the
world's biggest mining company, gained 1.8 percent. The Sunday
Telegraph said China is investigating ways it may scupper a
possible takeover of Rio Tinto, including taking a blocking
stake in it and making antitrust complaints.
Japan's Asahi newspaper said Japan's Fair Trade Commission
has also begun talks with counterparts in Europe and Australia
about a possible investigation into the proposed deal.
BHP was up 2.5 percent, while Anglo American <AAL.L>,
Xstrata <XTA.L>, Vedanta Resources <VED.L>, Kazakhmys <KAZ.L>,
Lonmin <LMI.L> and Antofagasta <ANTO.L> advanced between 0.1 and
3.6 percent.
The top gainer was Tui Travel <TT.L>, which rose 2.8 percent
on its first day of trading as part of the FTSE 100 index.
BT Group <BT.L> and Enterprise Inns <ETI.L> fell after
trading without dividend rights.
(Additional reporting by Dominic Lau, Michael Taylor and Amanda
Cooper; Editing by Rory Channing)
(([email protected]; Reuters Messaging:
[email protected]; +4420 7542 2575))