FTSE jumps as banks and miners lead

By Michael Taylor

LONDON (Reuters) - The blue-chip index ended 1.6 percent higher on Wednesday as beaten-down banking stocks rebounded, while firmer metal prices buoyed miners.

The FTSE 100 .FTSE rose 89.1 points to 5,529.6 after falling 1.3 percent in the previous session, and is down 14.3 percent for the year to date.

But with data light and volumes thin, many market participants doubted the sustainability of the rise on the benchmark.

"Equity markets are reacting to the likelihood of recession. The U.S. economy is verging on recession and, as for the UK, a recession may be under way already," said Mike Lenhoff, chief market strategist at Brewin Dolphin.

"Interest rates and oil prices need to come down before confidence in equity markets returns," he said, cutting his year-end target for the FTSE 100 to 6,200 from 7,200.

Banks were the leading sector, accounting for 24 positive index points after Fed Chairman Ben Bernanke said on Tuesday the U.S. central bank may keep an emergency lending facility for big Wall Street banks open longer than it initially intended.

Barclays (BARC.L), Royal Bank of Scotland (RBS.L), HSBC (HSBA.L), HBOS HBOS.L, Lloyds TSB (LLOY.L) and Standard Chartered (STAN.L) advanced between 1 and 6.7 percent.

Mid-cap Bradford & Bingley BB.L, which has been battered by concerns over its future and the impact of a deteriorating economy, bounced 27.2 percent despite several investment banks cutting their price targets on the lender.