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Japan hopes lift FTSE, commods lead

Published 03/17/2011, 05:48 AM

* FTSE 100 up 0.9 percent

* Commodity stocks firm as metal, oil prices rise

* Vodafone buoyed by broker upgrade

By Tricia Wright

LONDON, March 17 (Reuters) - Britain's top share index rose on Thursday as latest news from Japan on its attempt to avert a nuclear disaster calmed some investor nerves, with commodity stocks notching up the biggest gains.

By 0923 GMT, the FTSE 100 index was 51.97 points, or 0.9 percent, higher at 5,650.20, bouncing back after six sessions of falls.

The index has had more than 50 billion pounds ($80 billion) wiped off its value since Japan suffered its huge earthquake on Friday.

"I think investors are almost reacting to every perceived informed comment. They are taking a slightly more positive view (on the situation in Japan)," Keith Bowman, an analyst at Hargreaves Lansdown said.

Japanese military helicopters dumped water to cool overheating nuclear reactors at the Fukushima Daiichi plant, while the Group of Seven ministers hold talks later on Thursday to discuss the economic and financial impact of Japan's crisis.

Miners advanced against a backdrop of firmer metals prices, led higher by BHP Billiton, up 2.6 percent.

Energy stocks were also in demand, with Brent crude 1.5 percent firmer at $112.30 as investors nervously watched tensions in the Middle East.

Bahrain arrested at least six opposition leaders on Thursday, a day after its crackdown on protests by the Shi'ite Muslim majority drew rare U.S. criticism and raised fears of a regional conflict.

Buyers came in for the insurers, after Legal & General, up 0.4 percent, unveiled full-year results.

L&G, Britain's fourth-biggest life insurer by market value, hiked its dividend by a more-than-expected 24 percent and said it was set for strong growth, prompting Nomura to repeat its "buy" rating on the stock, saying the business model is moving in the right direction.

Peer Prudential was the standout FTSE 100 performer, up 3.6 percent. UBS identified the company, along with Man Group and Carnival, as particular buying opportunities thrown up by market weakness.

UBS analysts said the market appears to be oversold, and sticks with its end-2011 target of 6,700 for the FTSE 100.

"Although risks are ongoing, European equities now trade on single-digit multiples (9.4 times 2012 PE). We see value." UBS said in a note.

Elsewhere among the gainers, Vodafone climbed 1.8 percent, boosted by an upgrade to "neutral" by Evolution after an investor day.

"Whilst we are currently seeing a positive vibe as it appears nuclear meltdown will be averted the underlying cost of recovery from the devastation is still going to exist," Mic Mills, head of electronic trading at ETX Capital, said.

"The bullish sentiment may well be shortlived as realism rather than reaction set in." (Additional reporting by David Brett; Editing by Hans Peters) ($1=.6221 Pound)

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