July 17, 2013 / 12:11 PM / 4 years ago

Britain's FTSE recovers as financials rebound

* FTSE 100 turns positive after Bank of America results

* Miners advance as BHP updates on output

* Financial shares recover to trade higher

By Atul Prakash

LONDON, July 17 (Reuters) - Britain’s top share index recovered by midday on Wednesday to trade slightly higher, as financials turned positive after Bank of America reported a 70 percent rise in second-quarter profit.

Results from the second-biggest U.S. bank by assets prompted investors to return to the market, which had slipped earlier after the minutes from the Bank of England’s last policy meeting showed all policymakers had voted against further asset purchases.

The UK banking index was up 0.3 percent after falling earlier, while the blue-chip FTSE 100 index was up 5.34 points, or 0.1 percent, at 6,561.69 by 1025 GMT after falling as low as 6,517.38 earlier in the session.

“It’s a reaffirmation that U.S. bank earnings are coming strong. The numbers from Bank of America seem to be pretty clean and the market is reacting to that,” Ishaq Siddiqi, market strategist at ETX Capital said.

The medium-term outlook for the UK stock market remained positive. Barclays Stockbrokers said a survey of its clients showed they were optimistic in their outlook for the future of the FTSE index.

It said 70 percent of the respondents thought the FTSE was well positioned for a recovery, against 8 percent who believed the FTSE had bottomed out.

The markets were awaiting the U.S. Fed Chairman Ben Bernanke’s testimony in front of the House Financial Services Committee.

There is likely to be plenty of volatility in the markets around the speech, especially given it takes place during the overlap between the European and U.S. session.

Mining companies were also in demand. The UK mining index was up 1.7 percent, helped by BHP Billiton which said its iron ore production rose 9 percent to a record level. BHP shares were up 2 percent.

“Quarterly production updates from BHP and Fresnillo are having a knock-on effect on the sector,” Tom Robertson, senior trader at Accendo Markets, said.

BHP said it was ahead of plans to expand its iron ore operations in Australia. The news was in line with an update from Mexico’s Fresnillo, the world’s largest primary silver producer, which said the metal output was in line with guidance. Fresnillo was up 3.3 percent. (Editing by Jane Merriman, Ron Askew)

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