14 10 / 2011
* Banks climb as ministers meet in Paris to discuss debt woesBy David BrettLONDON, Oct 14 (Reuters) - Britain’s top share index rebounded on Friday as investors took positions ahead of a G20 finance ministers’ meeting in Paris to discuss Europe’s debt problems and after data from China fanned demand hopes in the region.Traders viewed the softening of inflation as a sign that the Chinese government would be unlikely to tighten its monetary policy further, thereby lifting some worries over the demand outlook from the world’s most voracious consumer of raw materials.”While the Chinese authorities have made it clear that inflation remains the focal point of central bank policy, the prevailing pressures (slowing growth, euro zone debt) suggest the time is drawing near for policy easing either in the form of a reduction in reserve requirement ratios or cuts in interest rates or both,” said Mike Lenhoff, chief strategist at Brewin Dolphin.Miners and integrated oil stocks rose sharply along with base metals and crude oil .Xstrata was the top performer among miners, rising 3.5 percent.One of its major shareholders, Glencore International , lost l 4. percent to become the top FTSE 100 faller, with traders citing talk that Goldman Sachs was undertaking a secondary placing of a $175 million convertible bond for the commodities trader.Banks rose, but their gains were overshadowed by those of the mining sector, after several factors combined to take some of the wind out of their sails.Fitch downgraded Swiss bank UBS and threatened to cut seven other European and U.S. banks, while Standard and Poor’s cut Spain by one notch to AA-minus, although that only brought its rating into line with rival agency Fitch. .The euro zone debt crisis will dominate a summit of G20 finance chiefs and central bank heads in Paris, with a downgrade of Spain’s credit rating highlighting the risk of a much larger economy than Greece coming under threat.French and German officials are trying to put flesh on the bones of a crisis resolution plan in time for an EU summit on Oct. 23.”If investors are expecting a ‘bazooka’-style resolution to the crisis they will be in for a disappointment, and are likely to react strongly if they don’t get one,” said Lothar Mentel, chief investment officer at Octopus Investments, which manages $3.9 billion.Britain’s benchmark index rose 38.92 points, or 0.7 percent to 5,442.30 by 1111 GMT in thin trade, rebounding from a 0.7 percent decline on Thursday.The FTSE continued to struggle to break and hold above the 5,450 level. The index has sold off sharply from this level over the past few months.”In order to tackle the 5,600 level the FTSE will need to close above 5,445 for at least three days,” Sandy Jadeja, chief technical analyst at City Index, said.”The flipside is that the resistance level may push the index lower again as it has done in the past. 5,340 would be the level to keep an eye on.”Among individual stocks, Severn Trent fell 1.2 percent, underperforming a rising FTSE 100 , weighed by an HSBC rating downgrade on the water company to “underweight” from “neutral” on valuation grounds.On the macro economic front no British data is released on Friday, so investors’ economic focus will be across the Atlantic.U.S. stock index futures pointed to a higher open for equities on Wall Street on Friday, ahead of the September U.S. retail sales due at 1230 GMT, with a 0.7 percent monthly rise forecast after being flat in August. U.S. September import and export prices were due at the same time.