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Strength in commods, drugs lift FTSE 0.1 pct

Published 10/26/2009, 05:15 AM
Updated 10/26/2009, 05:18 AM
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* Oils, miners gain on firmer commodities prices

* Shire leads drugs higher on Vyvanse news

* British Airways falls on antitrust threat, downgrade

By Jon Hopkins

LONDON, Oct 26 (Reuters) - Britain's leading share index was up 0.1 percent in early deals on Monday, just extending gains set on Friday, thanks to strength in heavyweight oils and miners as commodity prices rose, while drug issues also found support.

By 0853 GMT, the FTSE 100 index was 6.16 points higher at 5,248.73, having closed up 35.21 points on Friday at 5,242.00 after shrugging off a shock fall in UK GDP data.

"It's a really quiet start, with many traders in London away for (school's) half term but, with gains in Asia, the FTSE 100 has managed to keep pushing forward mainly thanks to commodity issues," said David Morrison, market strategist at GFT Global.

Oil majors led the UK blue chips higher as crude prices held around the $80 a barrel level, with Royal Dutch Shell, BP, BG Group, and Tullow Oil adding 0.6 to 0.7 percent.

BP's incoming chairman, Carl-Henric Svanberg, will lead a shake-up of the oil giant's boardroom when he takes over, the Sunday Times reported.

Miners also lent the FTSE 100 index some strength and metal prices benefited from a slightly weaker dollar. Lonmin Rio Tinto , Anglo American, Vedanta Resources, and BHP Billiton were up 1.1 to 1.4 percent.

The pharma sector saw good demand ahead of third-quarter numbers from the sector later this week, with Shire adding 1.2 percent, while AstraZeneca up 1.0 percent, and GlaxoSmithKline gaining 0.1 percent.

Shire got a boost from news that the U.S. Food & Drug Administration has determined that the firm's key attention deficit disorder treatment, Vyvanse was properly granted five-year market exclusivity.

BA RUNS INTO TURBULENCE

British Airways was the top FTSE 100 faller, losing 3.1 percent after report in the Financial Times said the airline, along with Iberia and American Airlines, may have to give up take-off and landing slots to satisfy EU conditions for a proposed tie-up.

Deutsche Bank also downgraded its stance on BA to "sell" from "hold.".

Financials were the biggest sectorial drag on blue chip sentiment, however, with banks and life insurers the worst performing sectors.

British banks must give breakdowns of bonuses by the end of the week or they will need to use the cash to beef up reserves, the Sunday Times reported quoting Adair Turner, head of Britain's banking regulator.

Meanwhile, retail banks should be stopped from paying big cash bonuses and use the money instead to support new lending according to the text of a speech to be given by the opposition Conservatives' finance spokesman on Monday.

Part-nationalised banks Lloyds Banking Group and Royal Bank of Scotland were the worst off, losing 1.9 and 2.1 percent, respectively, as investors fretted over cash call uncertainties.

Royal Bank of Scotland is planning to scale back its involvement in the government's asset protection scheme, media reports said on Saturday.

Sector heavyweight HSBC lost 0.2 percent, impacted by a downgrade to "hold" from "buy" by Citigroup.

Life insurer Prudential, off 1.3 percent, also fell victim to a broker downgrade with SG Securities cutting its rating to "hold" from "buy" on valuation grounds.

Among other weak life insurers, Legal & General, RSA Insurance, and Standard Life fell 0.4 to 0.7 percent.

Standard Life is not looking to sell off its underperforming Canadian business, according to a source, despite a newspaper report saying that it had asked its advisors to review the unit.

Japan's benchmark Nikkei rose 0.8 percent to hit its highest close in four weeks on Monday, lifted by exporters. But on Friday U.S. stocks fell as industrial companies' weak results overshadowed robust earnings from tech and retail heavyweights. (Editing by David Cowell)

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