London Markets: Bank shares drive Britain?s FTSE 100 index

By Clare Hutchison, MarketWatch

LONDON (MarketWatch) ? Britain?s FTSE 100 index climbed Thursday, with banks and insurance equities lifting the benchmark.

The FTSE 100 /quotes/zigman/3173262 UK:UKX +1.25% ?advanced 1.3% to finish at 5.457.

The index fell 0.6% in the previous session, under pressure after a European Central Bank funding operation failed to settle investors? worries over the region?s sovereign-debt crisis.

ECB tapped for ?490 billion

European banks rushed to take loans from the European Central Bank on Wednesday.

But investors saw the central bank?s action more favorably on Thursday, said Richard Hunter, head of U.K. equities at Hargreaves Lansdown PLC.?

?We had positive news from the ECB bonds yesterday, which has filtered through the market with positive momentum from Wall Street overnight,? Hunter said.

In economic news, Britain?s gross domestic product increased by 0.6% in the third quarter of 2011, beating a previous 0.5% growth estimate.

Shares of Major banks posted gains for the second day running. Royal Bank of Scotland Group PLC /quotes/zigman/155978 UK:RBS +3.99% ? /quotes/zigman/530544/quotes/nls/rbs RBS +2.69% jumped 4%, Lloyds Banking Group PLC /quotes/zigman/126322 UK:LLOY +3.67% ? /quotes/zigman/255656/quotes/nls/lyg LYG +4.64% ?added 3.7%, Barclays PLC /quotes/zigman/301787 UK:BARC +2.41% ? /quotes/zigman/152323/quotes/nls/bcs BCS +3.02% ?rose 2.4% and HSBC Holdings PLC /quotes/zigman/13843 UK:HSBA +1.76% ?climbed 1.8%.

Also higher, shares of oil major BP PLC /quotes/zigman/210014 UK:BP +2.45% ? /quotes/zigman/247026/quotes/nls/bp BP +2.92% ?gained 2.5%, as other oil companies also performed well. Tullow Oil PLC /quotes/zigman/271296 UK:TLW +1.90% ?advanced 1.9% and BG Group PLC /quotes/zigman/249967 UK:BG +1.95% ?was up 2%, with AMEC PLC? /quotes/zigman/152048 UK:AMEC +1.44% ?climbing 1.4%.

Insurance stocks gained ground as Old Mutual PLC /quotes/zigman/203487 UK:OML +4.15% ?topped the FTSE 100, its shares adding 4.2%. Aviva PLC /quotes/zigman/153201 UK:AV +2.67% ?traded up 2.7% and Legal & General Group PLC /quotes/zigman/160233 UK:LGEN +2.37% ?rose 2.4%.

Shares of International Airlines Group /quotes/zigman/3670411 UK:IAG +3.31% ?rose 3.3% after the company finalized its deal to buy British Midland Ltd. from Deutsche Lufthansa AG /quotes/zigman/184134 DE:LHA +2.11% ?for 175.2 million British pounds ($271 million).

Only eight companies in the index posted losses on Thursday.

Mining stocks Vedanta Resources PLC /quotes/zigman/336962 UK:VED -2.40% ?and Randgold Resources Ltd. /quotes/zigman/349729 UK:RRS -1.72% ?suffered as gold prices declined. They dropped by 2.4% and 1.7%, respectively.

/quotes/zigman/3173262

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Volume: 227,525

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Clare Hutchison is a MarketWatch reporter, based in London.

Source: http://feeds.marketwatch.com/~r/marketwatch/financial/~3/_6OxdKCLlH4/story.asp

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