FTSE gains 1 percent led by banks

By Michael Taylor

LONDON (Reuters) - The blue-chip index ended up 1 percent on Thursday, led by financials, after the Bank of England promised extra funds to ease liquidity pressure, while miners also supported the benchmark as metal prices rose.

The FTSE 100 .FTSE was 57.1 points higher at 5,717.5 after touching a high of 5,735.0 during a choppy trading session.

The UK benchmark index has lost almost 12 percent so far this year due to credit market turmoil and fears of a U.S. recession, and is on course for its worst quarter since the third quarter of 2002 and its third consecutive quarter of losses.

Banks were buoyed after the BoE offered 13.62 billion pounds at its regular one-week open-market operation, up from 10.93 billion pounds a week ago, while the European Central Bank promised to pump additional liquidity if needed as the quarter comes to an end.

Barclays (BARC.L: Quote, Profile, Research) gained 1.9 percent, Royal Bank of Scotland (RBS.L: Quote, Profile, Research) added 0.8 percent, HBOS (HBOS.L: Quote, Profile, Research) tacked on 3 percent and HSBC (HSBA.L: Quote, Profile, Research) put on 1.1 percent.

Merrill Lynch adding Barclays to its most preferred list also lifted the bank, while HBOS was removed from the broker's least preferred list.

Also in the financial sector, Man Group (EMG.L: Quote, Profile, Research) was 2.7 percent higher after the world's biggest listed hedge fund firm said underlying profit for the year ended March 31 would be ahead of analysts' average forecast.

"I don't think that any one of us believes that we've heard the last of problems for (investment) houses and banks," said Les Ames, a trader at WH Ireland. "But I'm of the opinion that fewer and fewer people believe that houses are going to go to the wall."