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Thursday Lunchtime Market: banks bounce

The late recovery in Wall Street last night continues to boost investors morale and supports a strong showing from financials.

Shaking off fears of the huge pension scheme deficits faced by several blue chip employers, the FTSE 100 had climbed 66 points to 3,550 approaching 1.30pm, while the techMARK lifted 11 points to 620.

Economic news was benign with UK December net new consumer credit rising to £1.92 billion in December and UK December M4 money supply up 0.9% on a seasonally adjusted basis to give a 7% rise on a year-on-year basis.

The US economy will probably generate more excitement this afternoon with fourth quarter GDP and weekly jobless claims data expected. The Dow Jones closed 22 points up at 8,110 last night but indications from the futures market suggest it lose these gains in early trading.

The supermarket bidding war came back into focus with news of solid trading at William Morrison and reports that an intermediary has offered substantial stakes in Safeway held by US fund managers to three of the food retailer's potential bidders.

William Morrison (MRW) climbed 6p to 165p as it reported like-for-like growth at an appetising 6.3% for the four weeks to 26 January.

Sainsbury (SBRY) lifted 10.25p to 237.25p and Safeway (SFW) perked up 1.5p to 306.5p.

Gathering opinion that solvency concerns are overdone following a reassuring statement from troubled life assurance group Britannic continue to support insurers.

A JP Morgan downgrade for the UK life assurance sector was shrugged off by Aviva (AV.), up 21.5p to 394.5p, Prudential (PRU), up 18.75p to 375.5p, Friends Provident (FP.), up 4.5p to 90.5p, and Britannic (BRT) rebounded 6p to 107p.

Solid results from Northern Rock (NRK), up 22.5p to 600.5p, yesterday and some favourable reaction from brokers have made a stronger impression on banks today with Barclays (BARC), up 15.75p to 344.5p, the main beneficiary.

AstraZeneca (AZN) soared 98p to £20.20 on solid results, which included earnings per share ahead of target.

GlaxoSmithKline (GSK) climbed 38p to £11.36.5 in sympathy.

In-line results from Rio Tinto (RIO) helped it mine a gain of 21.5p to £11.15 and also supported sector peer Xstrata (XTA) by 27p to 534p.

Hays (HAS) headed the FTSE 100 leaderboard as it jumped 5p to 76.5p on press reports that it is to sell its traditionally core logistics business as part of a potential break-up of the business.

The speculation also helped Exel (EXL), which announced that is to invest $10 million (£6.1 million) in Chinese company Sinotrans, recover from a Cheuvreux broker downgrade to climb 15p to 593p.

BAE Systems (BA.) tentatively edged up a penny to 119.25p ahead of a decision out this afternoon on who is to be the lead contractor in the government's CVF aircraft carrier contract.

Poorly received results from US Tobacco giants RTR and Altira and subsequent broker comment pushed down British American Tobacco (BATS) by a penny to 565p.

Other defensives Scottish & Southern Energy, down 11p to 598.5p, Alliance Unichem down by 6.25p to 381.75p and Scottish Power, down 2.25p to 328.5p, also fell in response to a more aggressively inclined approach from bulls.

Positive broker comment supported Capita by 10.75p to 204.75p, Dixons by 5p to 106.5p and Corus by 0.25p to 25.5p.

In the mid-caps Rank (RNK) tumbled 7p to 223.5p on news that Pete Beadrault its chief executive of its Hard Rock restaurants has resigned with immediate effect.

An impressive full-year performance and news of bid talks firmed Fitness First by 14.5p to 148p.

MTL (MTI) Instruments bounced up 10p to 87.5p today in response to a broker upgrade as the company affirmed that it is confident that full-year results will meet expectations.

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