* Banks lead rally; Lloyds higher on branch sale hopes
* Miners weak; Glencore down on doubts about Xstrata
A rally by recently hard-pressed banking stocks led a bounce back by Britain’s top share index on Wednesday, snapping a four-session losing streak, although low volumes indicated some fragility ahead of another key EU summit.
At 1037 GMT, the FTSE 100 (Euronext: VFTSE.NX – news) index was up 23.94 points, or 0.4 percent, at 5,470.90 points, with trading volume at just 19 percent of the 90-day daily average.
The UK blue chip index has been stuck in a tight trading range at around 5,435-5,514 points since the start of the week, but is down some 3 percent from a peak of just under 5,624 points on June 20 – indicating a broader downwards trend.
Banks were the best blue chip performers, bouncing back after sharp recent falls, led by Lloyds up 2.4 percent.
Fledgling banking venture NBNK said it had made a new proposal to buy 632 branches from the bank ahead of a scheduled Lloyds board meeting later on Wednesday.
Lloyds must sell the branches under European State Aid laws and had said it would update shareholders on the process by the end of this week. The Co-operative Group remains its preferred bidder.
Miners were the biggest drag on blue chip sentiment, tracking a fall by copper prices on growing concern over the demand outlook for metals due to global growth uncertainties and the impact of the euro zone debt crisis.
Commodities (Santiago: COMMODITIES.SN – news) trader Glencore was a big blue chip faller, down 3.9 percent as doubts about its planned $26 billion takeover of Xstrata were sparked by Qatar’s sovereign wealth fund – Xstrata’s second-largest shareholder – asking for better terms at nearly the last minute.
Xstrata shed 1.6 percent as shareholders fretted over whether or not Glencore would consider changing some of the terms of the deal.U.S. stock index futures pointed to a flat open on Wall Street on Wednesday, after a rally in the previous session, with investors awaiting May durable goods orders, due at 1230 GMT, and pending home sales for May, due at 1400 GMT, for clues as to the health of the U.S. economy.
Source: Reuters – UK