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Strong commodities drive FTSE higher

Published 02/02/2011, 04:25 AM
Updated 02/02/2011, 04:28 AM
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* FTSE 100 index gains 1 percent, back above 6,000

* Commodity issues boosted by firmer metal, oil prices

* Imperial Tobacco lifted by upbeat trading statement

LONDON, Feb 2 (Reuters) - Britain's top share index pushed higher on Wednesday, bolstered by strength in commodity issues and banks as signs of a surge in U.S. manufacturing tempted investors back into riskier assets like equities.

By 0856 GMT, the FTSE 100 index was up 62.10 points, or 1 percent, at 6,019.92, having added 1.6 percent on Tuesday.

Miners provided the main driver, occupying nearly all of the top 10 slots on the gainers list as metal prices firmed, with copper at record highs following recent positive economic data from the U.S. and China.

U.S. and Asian equities were buoyed overnight by data on Tuesday that showed the U.S. manufacturing sector grew at its fastest pace in nearly seven years.

"We are focused back on hopes for the improving global economy and away from the sideshow in Egypt, although there are still plenty of banana skins around the corner, not least Friday's U.S. jobs report," said Mic Mills, head of electronic trading at ETX Capital.

Fears over the impact of political unrest in Egypt faded after President Hosni Mubarak said he would surrender power following elections in September, as a million people took to the streets on Tuesday..

ENRC was a top FTSE 100 gainer, up 4 percent as the miner said ferroalloy production rose 5.6 percent in the fourth quarter as the company's operations in Kazakhstan ran at full available capacity.

Integrated oils also moved higher as the crude price held firm, led by BP up 0.8 percent.

BP, which fell after disappointing fourth-quarter results on Tuesday, has put half of its U.S. refining assets up for sale, including its giant Texas City plant.

Heavyweight banks saw good support too as investors' risk appetite returned, led by Barclays ahead 2.5 percent.

IMPERIAL TRIUMPHANT

Among individual stocks, Imperial Tobacco was the top blue-chip gainer, up 4.5 percent after the cigarette manufacturer said it had made a good start to the year with underlying tobacco net revenue up 5 percent

"We think this should put a stop to the recent rot in the share price and create a platform for a more balanced ticket of top line delivery in FY11," said analysts at Investec.

Peer British American Tobacco took on 1.4 percent.

Mobile phones giant Vodafone also lent its considerable strength to the blue-chip advance, adding 1.6 percent, as it named outgoing Philips Chief Executive Gerard Kleisterlee as its new chairman.

On the downside, AstraZeneca and TUI Travel were the two biggest FTSE 100 fallers as both traded ex-dividend on Wednesday, knocking 6.51 points off the index.

And interdealer broker ICAP shed 0.7 percent as an in-line trading update failed to impress.

Investors were awaiting UK construction PMI data for clues on whether the austerity measures being implemented by the coalition government are starting to bite.

Attention will then turn across the Atlantic where U.S. ADP National Employment data for January will be released at 1315 GMT, an indicator for Friday's key January U.S. jobs report.

(Editing by Erica Billingham)

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