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FTSE 100 hangs in there as investors regain confidence

THE FTSE 100 rose yesterday as gains from financial stocks, boosted by strong numbers from the UK arm of Spain&rsquo;s Banco Santander, and positive broker comment, outweighed a weak mining sector.<br /><br />The index closed 18.69 points, or 0.4 per cent, higher at 4,547.53, after ending 1.3 per cent lower on Tuesday when it failed to break records with a twelfth session of gains.<br /><br />The market &ldquo;just seems to be hanging in there and it reflects the growing conviction that there is a recovery out there, that the global economy is going to be reflated, which is what the central banks and the policymakers have been attempting to do,&rdquo; said Mike Lenhoff, chief strategist at Brewin Dolphin.<br /><br />Banks were the best performing sector after the UK arm of Santander, which includes <strong>Abbey</strong>, said profits rose by a third in the first half of the year as bad debts showed a second consecutive quarterly decline.<br /><br /><strong>HSBC, Lloyds Banking Group, Royal Bank of Scotland </strong>and<strong> Standard Chartered</strong> rose between 0.7 and 3.6 per cent.<br /><br />Life insurers were also higher. <strong>Aviva</strong> gained 3.3 per cent after Deutsche Bank lifted its rating on the stock to &ldquo;buy&rdquo; in a review of the UK sector which saw possible consolidation on the horizon. <strong>Prudential, Standard Life, Old Mutual and Legal &amp; General</strong> added 1.5 to 3.9 per cent.<br /><br />Energy stocks were mixed as crude prices fell below $64 a barrel after an unexpected rise in US crude inventories threw the focus on weak demand.<br /><br /><strong>BP</strong>, after losing 3.1 per cent on Tuesday following its mixed results, added 0.2 per cent, while <strong>Royal Dutch Shell</strong> put on 0.5 per cent ahead of its second-quarter numbers due today.<br /><br /><strong>BG Group</strong> fell 2.7 per cent after it posted a 31 per cent drop in its second-quarter profits and said lower gas demand meant it would not meet its 2009 production target.<br /><br />Weak metals prices weighed on the mining sector, the biggest drag on the index, with <strong>Anglo American, Antofagasta, Fresnillo</strong> and <strong>Rio Tinto</strong> down between 0.7 and 4.4 per cent.<br /><br /><strong>BHP Billiton</strong> fell 2.4 per cent. The miner has agreed with unnamed customers to take a 33 to 44 per cent price cut for contracted iron ore shipments, covering 23 per cent of its total sales volumes.<br /><br />Drinks can maker <strong>Rexam</strong> was the top faller, down 8.1 per cent after the group confirmed a &pound;334.3m rights issue but still traded above its theoretical rights price as it reported better-than-expected results.