By Sarah Turner
LONDON (Dow Jones)--London shares ended higher on Thursday as
banks took back some ground lost earlier in the week and the Bank
of England kept its key interest rate unchanged.
The U.K. FTSE 100 index closed up 0.8% at 5,244.37, taking back
some losses made this week. Over the first three days of the week,
the FTSE 100 declined 2.2%.
Banks were at the forefront of this week's losses in Europe as
ongoing worries about post-recession debt levels were exacerbated
by downgrades or potential downgrades from credit rating
agencies.
Still, losses for the banking sector didn't extend into
Thursday, with Barclays (BCS) shares up 4.6% and Standard Chartered
shares up 3.3%.
The move for the sector followed a report late Wednesday that
Citigroup Inc. (C) is planning to raise $20 billion by selling new
equity to help the giant bank repay the $45 billion it got from the
U.S. government's Troubled Asset Relief Program.
Meanwhile, the Bank of England refrained from making
monetary-policy waves on Thursday, keeping kept interest rates on
hold at 0.5% and its asset buying program unchanged, both as
expected.
The central bank's moves to support the economy and consumer
spending are seen as crucial for retailers as they approach their
busiest trading period of the year.
Deutsche Bank analysts said that they are staying positive on
the U.K. general retail sector and are expecting U.K. non-food
comparable sales to rise by 4% in December against the prior year
when sales fell 8% in the weakest month on record.
"Promotions remain heavy but more controlled than last year, so
margins should be firm," they said.
Catalog retailer Home Retail , up 1.4%, should benefit from the
absence of Woolworths in toys, they said. Home improvement retailer
Kingfisher , up 1.6%, looks attractive on earnings-per-share
momentum and is their top pick in the sector, the analysts
said.
In addition, electrical products retailer Kesa Electricals , up
2.4% outside the top index, was upgraded to buy at the broker.
Another non-FTSE 100 gainer, DS Smith shares surged 13.4%. The
packing and office products firm posted a 33% rise in first-half
net income to 23.5 million pounds and said that it now expects to
beat its fiscal-year targets.
Petropavlovsk , a U.K.-listed Russian gold miner, dropped 4%
after narrowly missing out on entering the FTSE 100 index. Aggreko
, which is being promoted, rose 0.4%.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274