FTSE up as central banks act to boost liquidity

By Atul Prakash

LONDON (Reuters) - The top share index ended sharply higher on Wednesday as central banks moved to boost financial markets' liquidity, as commodity stocks tracked rising metal and crude prices and insurers posted strong profits.

Sentiment was also underpinned by a report showing U.S. private employers unexpectedly added jobs in July.

The commodity-heavy FTSE 100 .FTSE closed 101.5 points higher at 5,420.7 after ticking up 0.1 percent on Tuesday to halt a three-session losing run.

Stocks jumped as the European Central Bank, the U.S. Federal Reserve and the Swiss National Bank announced an enhancement of their dollar liquidity-providing operations to ease credit strains that have weighed on the global economy.

The central bank actions were intended to ease persistent global financial instability as institutions write down losses from exposure to risky U.S. mortgages.

"The market has been desperately seeking some positive news after the writedowns and expected rights issues from Merrill Lynch," said Andrew Turnbull, director at Blue Index CFDs.

"We have seen recovery in a number of equities within the financial sector, with many of our clients switching out of Lloyds TSB and into a number of other banks including Barclays, which we consider was oversold yesterday."

The banking sector topped the FTSE gainers list, with Royal Bank of Scotland (RBS.L: Quote, Profile, Research), Barclays (BARC.L: Quote, Profile, Research), HSBC (HSBA.L: Quote, Profile, Research) and Standard Chartered (STAN.L: Quote, Profile, Research) rising between 2.7 and 5 percent.