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* FTSE 100 up 1.2 pct
* Banks hit 1-1/2 year high
* Rio benefits from Credit Suisse upgrade
* WPP falls on reported DOJ probe
By Alistair Smout
LONDON, Dec 7 Britain's top share index rose on
Wednesday, rallying for a third straight session as investors
snapped up bank stocks and miners and rotated out of more
"defensive" parts of the market.
The British FTSE 100 was up 82.38 points, or 1.2
percent, at 6,862.22, and is up 1.9 percent so far this week.
Financials contributed 31 percent to the rise, supported by
gains in euro zone lenders. Italian banks continued to rally off
of lows hit after the Italian prime minister said he would
resign after voters rejected his reforms in a referendum.
Barclays rose 2.7 percent, hitting its highest
level this year, while Royal Bank of Scotland rose 3
percent to its highest point since Britain voted in June to
leave the European Union.
In all, banks were up 2.6 percent, reaching a
1-1/2 year high. Standard Chartered led the sector with
a 3.8 percent gain.
"In the UK but also more broadly, people are rotating into
financials on expectations of higher inflation and higher
yields," said Jasper Lawler, senior market analyst at London
Capital Group, adding that the European Central Bank could help
to support the sector when it meets on Thursday.
Mining stocks were also strong gainers, with Rio Tinto
the top gainer on the FTSE 100, up 4.1 percent to 3,145
pence as it benefited from an upgrade by Credit Suisse.
The global miner was lifted to "outperform" from "neutral"
by the Swiss bank, who raised its target price on the stock to
3,600 pence from 2,750 pence.
Peer BHP Billiton rose 1.5 percent, buoyed by a
rising copper price, but lagged as it was downgraded to
"With an improvement in laggard commodities like thermal
coal and copper (and, to a lesser extent, aluminium), and with
iron ore exhibiting less downside risk versus coking coal for
BHP, we believe Rio now has the better earnings outlook for the
year ahead," analysts at Credit Suisse said in a note.
Among fallers, advertiser WPP dropped 2.1 percent
after a report that the U.S. Justice Department was
investigating the industry.
Stocks such as consumer staple Unilever and pharma
firm Shire dipped as investors moved out of "expensive
defensives" to take on more risk. Unilever was knocked by a
downgrade from JP Morgan, while Shire suffered from a downgrade
Precious metal miners Fresnillo and Randgold
slipped as safe-haven gold fell on the prospect of
higher interest rates in the United States.
(Reporting by Alistair Smout; editing by Mark Heinrich)