By Simon Kennedy, MarketWatch
LONDON (MarketWatch) -- U.K. stocks climbed Wednesday, helped by
further strong gains for the banking and mining sectors, while
retailers lost ground after a trading update from supermarket chain
J Sainsbury PLC.
The FTSE 100 index rose 0.2% to 6,023.91 in afternoon trading,
but the London benchmark's gains lagged behind those of other
European markets.
Spanish and Italian shares led a strong rally on the Continent
after a successful Portuguese bond auction and reports that the
European bailout fund could be strengthened.
London-listed bank shares moved mostly higher, reflecting the
gains across Europe.
Shares of HSBC Holdings (HBC) climbed 3.1%, extending gains from
the previous session, when Citigroup upgraded its rating to
buy.
Shares of Barclays PLC (BCS) rose 1.7%, and Standard Chartered
PLC added 2.4%.
Investors bought into banking stocks ahead of the bond auction
on the expectation that the sale will go well, said Yusuf Heusen,
senior sales trader at IG Index.
"Investors appear positive following a spate of bond-buying from
the European Central Bank and supportive comments from China and
Japan," he added.
Among mid-cap financials, shares of Henderson Group jumped 9.7%.
The fund manager said it would buy smaller rival Gartmore Group in
an all-stock deal, with Gartmore's shares climbing nearly 12%.
Mining stocks benefited from a higher commodity prices. Shares
of Kazakhmys PLC gained 2.9%, and Vedanta Resources PLC added
3.9%.
On the downside, shares of several retailers declined after the
trading update from J Sainsbury . The retailer reported a 7.5% rise
in total sales for the third quarter and a 5.4% increase in
comparable sales, but its shares dropped 1.7%.
Seymour Pierce analyst Kate Calvert said the figures appear to
confirm that Sainsbury achieved the fastest growth of the major
food retailers over the Christmas period. Calvert stuck to a sell
recommendation, however, saying that the growth is already
reflected in the group's premium valuation when compared to
rivals.
Among other retailers, shares of Tesco PLC dropped 1.3% and
Marks & Spencer Group PLC slipped 0.9%.
Also lower, shares of mobile-telecom giant Vodafone Group PLC
dropped 1.7% following a downgrade to equal-weight from overweight
at Barclays Capital.
House builder Barratt Developments PLC saw its shares lose about
1.6%. The company reported a decline in the number of completions
in the first six months of its fiscal year and said growth for the
rest of the year is likely to be limited.
Shares of rival Persimmon also fell.