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Commodities help FTSE advance; Shell shines

Published 10/28/2010, 11:54 AM
Updated 10/28/2010, 11:56 AM

* FTSE 100 index gains 0.6 percent

* Commods higher as dollar slips; Shell Q3 tops forecasts

* AstraZeneca weak as Q3 revenues fall

By Jon Hopkins

LONDON, Oct 28 (Reuters) - Britain's top share index pushed higher on Thursday, helped by a rally in heavyweight commodity issues, notably oil major Royal Dutch Shell, whose third-quarter results beat market expectations.

The FTSE 100 ended up 31.87 points, or 0.6 percent, at 5,677.89, recovering after it reached its lowest closing level since Oct. 5 on Wednesday.

Energy issues were in demand as Shell, up 0.5 percent, posted an 18 percent jump in third-quarter profits thanks to higher oil and gas prices, setting a benchmark for the sector.

Peer BG Group added 0.8 percent after saying it had begun production from Tupi, one of its key fields, in the Santos basin off the coast of Brazil.

Miners found support as investors switched out of the dollar following recent strength boosting metal prices, with BHP Billiton the best off, up 2.7 percent.

The UK blue-chip index drifted off a session peak above the 5,700 level late in the afternoon as Wall Street turned lower after opening gains.

U.S. blue chips were down 0.2 percent by London's close, weighed on by weakness in tech and industrial issues and speculation the Federal Reserve's proposed economic stimulus programme will be less aggressive than initially thought.

This was given some extra weight by more positive economic data as weekly jobless claims unexpectedly fell to 434,000.

"So the Fed's headache becomes a more sustained migraine every day, and as the markets seek clarity the U.S. economy continues to paint a very confusing picture," said Will Hedden, a sales trader at IG Index.

Investors will look for Friday's U.S. third-quarter GDP figures to show further direction ahead of next week's key meeting by the Fed's FOMC policy-setting panel.

The latest Reuters survey showed most leading economists expect the Fed to buy between $80 billion and $100 billion worth of assets per month, with estimates for how much it will eventually spend varying from $250 billion to $2 trillion.

VODAFONE BOOST

Blue-chip heavyweight Vodafone lent the market the most strength, adding 2.7 percent to hit a two-year high, as the mobile operator benefited from strong results from its peers, notably France Telecom.

Among other gainers, ARM Holdings added 3.2 percent as the chip designer bounced back from a retreat following results, and with an H2O Markets "buy" rating.

On the downside, AstraZeneca dropped 3.3 percent as the drugmaker's revenue fell 4 percent in the third quarter, hit by generic competition to key drugs and the absence of last year's windfall sales of swine flu vaccine.

Peer GlaxoSmithKline shed 0.9 percent.

Temporary power supplier Aggreko was the biggest blue-chip faller, down 4.2 percent as it raised its full-year outlook again, with JP Morgan staying "neutral" and saying the stock's rating continues to look full.

(Editing by Michael Shields)

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