UK's top share index rises

Britain's top share index ended 2.4 percent higher on Wednesday, with Lloyds rocketing and other embattled banks extending their rally to a third day as fears that they will be nationalised ebbed. Lloyds Banking Group soared more than 50 percent, battling back after being hammered recently by investors' fears about the threat of nationalisation in the sector.
Reassuring investors in Lloyds, Citi Analyst Tom Rayner said a full nationalisation of the bank would be "unnecessary and inconsistent with the stated aim of government". He upgraded his stance on the shares to "buy". The FTSE 100 ended up 100.79 points at 4,295.20 points, having closed 0.4 percent lower on Tuesday. After a fortnight of hefty losses, the banking sector has bounced strongly this week. Royal Bank of Scotland added over 35 percent.
Barclays, jumped 18.9 percent and is up 109 percent this week after saying on Monday it would not need fresh capital. "One of the big problems of the banking sector has been the lack of visibility when it comes to earnings, some of the reports we've seen over the last few days has certainly helped with transparency," said Henk Potts, strategist at Barclays Stock Brokers.
The FTSE banking sector is up almost 25 percent this week but is still down nearly 16 percent this year after sinking over 56 percent in 2008. "(The market's) only repairing some of the damage that has been done," said Neil Parker, a strategist at Royal Bank of Scotland. "I'm not convinced about the longevity of this move."
Shares rose strongly across Europe and Wall Street was also in higher. Among companies in the red were some miners. Xstrata dropped 9.1 percent to lead FTSE losers on worries the firm might issue shares to help pay off its debt load, analysts said. Rio Tinto dropped 1.5 percent after the global miner, facing persistent rumours it might need to sell shares to help pay off $39 billion in debt, conceded that an equity raising was one option being considered.
Vedanta Resources shed 1.7 percent after it posted a 98.5 percent fall in third-quarter core profit on Wednesday due to low metals prices, inventory writedowns and currency losses. However other miners were higher with Anglo American, BHP Billiton and Antofagasta up between 1.7 and 5.5 percent, supported by firmer metals prices. Dominating the economic agenda, the US Federal Reserve is due to release its January interest rate verdict at 1915 GMT.
Policymakers, battling to prop up an economy ravaged by a credit crisis, are expected to hold borrowing costs in the 0-0.25 percent range. They are expected to focus on credit-easing measures that have already doubled the size of the Fed's debt to over $2 trillion. "The Fed has effectively got to use all the means at its disposal in order to get the economy on an even keel, and that means it will further investigate the debate on quantitative easing," RBS's Parker said.
In the UK, the British government's forecast for a strong rebound in economic growth next year is optimistic and preparations must be made for the "worst-case scenario", a group of lawmakers said. Pay-TV firm BSkyB jumped 12.7 percent after it beat forecasts with 171,000 net new customers in the second quarter and said it planned to create around 1,000 jobs after starting the year in a strong position.
On the downside, sugar refiner and sweetener maker Tate & Lyle lost 2.4 percent after it warned its year profits would be towards the lower end of market expectations and around the level of the prior year. Compass Group, the only FTSE stock to trade ex-dividend, fell 1.5 percent.