Banks lead stocks up as earnings provide lift

LONDON (Reuters) - UK shares gained on Thursday, led higher by banks after encouraging results from Lloyds, as more positive reports from companies across the index prompted a rebound from the previous session's falls.

Lloyds Banking Group added 6.2 percent after results which revealed that the bank's exposure to bad debt had fallen, helping bring up other banks such as Barclays, which had released disappointing results in the previous session.

"It's financials that are the story today," Arthur Gordon, co-head of UK sales at Canaccord Genuity, said.

"Some of the stocks that got carried away, like Barclays and Standard Chartered have been brought back into line a bit. I still think there's value there in the banks." Barclays and Standard Chartered gained 2.6 and 1.2 percent respectively.

At 1135 GMT, the FTSE 100 index was up 30.80 points, or 0.5 percent at 5,813.50, with banks alone adding over 11 points.

The ongoing earnings season provided a lift across other sectors too, helping the FTSE reverse some of Wednesday's 1.2 percent drop following a string of gloomy earnings and outlooks from firms such as BG Group, Barclays and GlaxoSmithKline.

Telecoms firm BT Group was the top individual FTSE 100 gainer, up 6.6 percent. Despite missing expectations for second-quarter revenues, EBITDA was in-line, and earnings were slightly ahead.

"Overall we believe much of the revenue weakness had been expected and there may be some relief that it is not worse, and that BT has been able to save most of it through cost reductions," Espirito Santo Investment Bank said in a note.

Pay-TV and telecoms provider BSkyB also saw strong demand, up 4.9 percent in volume of 1.5 times its 90-day average, as its first-quarter earnings rose 16 percent, with Numis Securities hiking its rating for the stock to "buy" from "add".

Despite expectation-beating results for from Royal Dutch Shell, which added 1.1 percent, energy stocks were flat, as gains across the sector were countered by further hefty falls from BG Group.

After plunging nearly 14 percent on Wednesday following a cut in production outlook with its results, BG shed another 4.4 percent, chopping over 6 points off the blue chip index.

"The press this morning wasn't especially positive. The stock is going through a derating process at the moment," Canaccord's Gordon said, also noting that Shell's proposed dividend was disappointing compared to BP's, which was announced earlier in the week.

Chemicals firm Croda International was also a big blue chip faller, dropping 3.5 percent in volume of over twice its 90-day daily average, after it said trading weakened in September, with month-on-month trading volatile.

(Additional reporting by Jon Hopkins; Editing by Toby Chopra)

Source: http://news.yahoo.com/stocks-bounce-back-earnings-news-boost-082056989--finance.html

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