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Energy stocks keep the FTSE warm despite banking falls

THE FTSE 100 gained 0.2 per cent yesterday, keeping level after a rally from heavyweight energy issues offset weakness in banks and mining stocks. The index closed 9.23 points higher at 5,200.97, after ending 1 per cent lower on Monday.<br /><br />The blue-chip index has gained about 51 per cent since hitting a six-year low in March, though is still 3.7 per cent below its level in mid-September 2008, before the collapse of Lehman Brothers.<br /><br />Energy stocks added the most points, headed by <strong>BP</strong>, which gained 4.8 per cent after the it reported a halving of third-quarter profits but beat forecasts by a wide margin. <br /><br />&ldquo;BP provided the FTSE&rsquo;s fuel today, stoking hopes that UK third-quarter corporate earnings will outperform, but there remains enough uncertainty, in a thinly traded market, to curb overall enthusiasm,&rdquo; said Mic Mills, senior trader at ETX Capital.<br /><br /><strong>BG Group</strong>, which posts its third-quarter results today, added 0.8 per cent, while <strong>Royal Dutch Shell</strong> firmed 1.7 per cent, and <strong>Cairn Energy</strong> gained 0.8 per cent.<br /><br />Pharmacueticals were also in demand ahead of third-quarter numbers from the sector later this week. <strong>GlaxoSmithKline</strong>, due to post results today, added 2.2 per cent. <strong>AstraZeneca</strong>, scheduled to report its results tomorrow, rose 2 per cent, while <strong>Shire</strong> added 0.5 per cent.<br /><br />Elsewhere among the blue-chip gainers, a broker upgrade boosted <strong>Reed Elsevier</strong>, up 3.3 per cent. Exane BNP Paribas lifted its rating for the Anglo-Dutch publishing group to &ldquo;outperform&rdquo; from &ldquo;underperform&rdquo; on valuation grounds.<br /><br /><strong>Home Retail Group </strong>was also hoisted by broker comment, adding 2.7 per cent as Barclays Capital started coverage on the Argos-owner with an &ldquo;overweight&rdquo; rating in an otherwise negative initiation note on the European retail sector.<br /><br />Banks were the biggest drag on the blue-chip index, with <strong>Royal Bank of Scotland</strong> the top faller, off 8.2 per cent. Investors were unsettled by mounting fears that RBS and <strong>Lloyds Banking Group</strong> could be ordered into disposals by the European Commission after Dutch peer ING on Monday announced that it would split into two and launch a rights issue in a move designed to satisfy regulators. Lloyds shares fell 6.2 per cent, while <strong>Barclays</strong>, <strong>HSBC</strong> and <strong>Standard</strong> <strong>Chartered</strong> shed 0.8 to 3.6 per cent.<br /><br />Miners were weak reflecting easier metal prices as doubts about the demand outlook resurfaced. <strong>Vedanta</strong> <strong>Resources</strong>, <strong>Fresnillo</strong>, <strong>Rio</strong> <strong>Tinto</strong>, <strong>Xstrata</strong>, <strong>Anglo</strong> <strong>American</strong> and <strong>Kazakhmys</strong> lost 2.1 to 5.1 per cent.