CORRECTED – Financials, commods fuel 1.4 pct FTSE rise

(Corrects percentage change in second paragraph to 1.4 percent
from 1.0 percent)

* FTSE closes up 1.4 pct at 5,350.55

* Banks rebound from recent falls, commodity stocks gain

* Insurance stocks jump as M&A talk swirls

By Simon Falush

LONDON, Aug 17 (BestGrowthStock) – Financial stocks and commodity
companies pushed Britain’s top share index up for a third
session by the close on Tuesday, as fears about a global
economic slowdown abated and raw material prices gained.

The FTSE 100 (.FTSE: ) ended up 74.45 points, or 1.4 percent,
at 5,350.55, its highest close in a week.

Miners were firmer, supported by metal prices which rose on
expectations of strong physical demand and a weaker dollar.

Lonmin (LMI.L: ) was the stand-out gainer, up 5.9 percent,
while Xstrata (XTA.L: ) and Kazakhmys (KAZ.L: ) added 4.5 and 3.7
percent respectively.

But BHP Billiton (BLT.L: ) was the biggest blue-chip faller,
down 2.4 percent as it launched an unsolicited $38.6 billion
takeover bid for Potash Corp (POT.TO: ), that was rejected as
“grossly inadequate”.

The index fell 1.1 percent last week and is still down over
8 percent since fears on Europe’s government finances erupted in
mid-April, and investors are still wary of making big moves into
the market.

The index has surpassed its 200-day moving average of
5,340.04 but on very thin volumes, with the index trading at
only around 62 percent of its 90-day average.

“In the context of the falls last week, it’s not surprising
we are up, with slightly better commodity prices, but volumes
are very low so I wouldn’t read too much into moves today,” said
Colin McLean, managing director at Scottish Value Management in
Edinburgh.

Energy shares also performing well along with crude (CLc1: ),
which snapped a five-day losing streak to rebound above $76 a
barrel.

Oil majors Royal Dutch Shell (RDSa.L: ) and BG Group (BG.L: )
rose 1.8 and 1.6 percent respectively.

BP (BP.L: ), however, fell 0.4 percent as technical issues on
Monday muddled the timing of its planned final kill of its
blown-out Gulf of Mexico oil well. [ID:nN16270618]

Edinburgh-based Cairn Energy (CNE.L: ) fell 1.4 percent,
shedding some of the previous session’s gains.

On Monday Vedanta Resources (VED.L: ) said it would spend up
to $9.6 billion acquiring as much as 60 percent of Cairn India,
in which Cairn Energy holds 62.4 percent.

British consumer price inflation slowed in July but, as
expected, remained above 3 percent, slightly adding to the
FTSE’s gains as concerns about the potential for higher interest
rates dissipated. [ID:nLDE67G0OZ]

Banks, which have been hamstrung by worries over the
economic recovery in recent days, bounced higher with Barclays
(BARC.L: ) up 2.8 percent.

INSURER FOCUS

But insurers were the centre of attention on Tuesday, with
Aviva (AV.L: ) gaining 5.1 percent and traders citing talk that
French peer Axa (AXAF.PA: ) may be interested in an approach. Axa
and Aviva declined to comment.

M&A speculation on the sector resurfaced last week when
Aviva rejected a 5 billion pound bid from peer RSA Insurance
Group (RSA.L: ).

Prudential (PRU.L: ), seen as vulnerable to an approach after
it failed in its bid to buy the Asian assets of AIG, also added
5.1 percent.

“Given that any kind of bid action from RSA is likely to be
protracted, clients are seeing upside in all of the sector,”
said Giles Watts, head of equities at City Index.

British Airways (BAY.L: ), up 2.3 percent, led a clutch of
travel-related firms higher after a threatened walk-out by
airport ground staff, potentially disrupting the plans of
thousands of travellers at the height of the holiday season, was
averted. [ID:nLDE67F1RQ]

Travel firm TUI Travel (TT.L: ) gained 3.6 percent and mid-cap
peer Thomas Cook (TCG.L: ) rose 2.9 percent.
(Editing by Hans Peters)

CORRECTED – Financials, commods fuel 1.4 pct FTSE rise