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FTSE gains on financial services

Wednesday, February 06 09:41:19

British blue chips gained in morning trade, with financials and basic materials stocks benefiting from positive company reports, raising hopes that economic activity may be rebounding.

By 0920, the FTSE 100 index was up 31.68 points, or 0.5 percent, at 6,314.44, adding to gains made yesterday on the back of good results and an improving economic outlook in Europe.

However, the FTSE 100 is still in negative territory for the week, having had its worst day for three months on Monday. The index has not posted a weekly fall all year, but traders saw the dip as temporary.

"Its seems the sell off was limited to around 1-1.5 percent and we are now heading up again. The trend still points upwards," Jawaid Afsar, a sales trader at Securequity, said.

"Expect volatility to increase from here as macro issues make the headlines such as the U.S budget and also the Italian elections. Buying the dips seems the right thing to do for the time being at least."

Materials and financials combined to add over 18 points to the index, with the unexpectedly bullish updates from sectors worst hit by the financial crisis helping stocks that rise and fall with economic optimism.

Hargreaves Lansdown surged over 7 percent to be the top FTSE riser, leading other asset managers higher.

The investment management firm saw pre-tax profit increase 30 percent and announced total assets under administration have surpassed 30 billion pounds, up 30 percent on the end of last year.

"We take comfort in strong management and corporate governance, as well as in the regard by which Hargreaves Lansdown is held by its customers," analysts at Canaccord Genuity said a note, raising its rating on the stock to 'Buy'.

Major banks have been cutting trading staff and have had a scandal ridden year, but while trading volumes are generally in decline, co-founder Peter Hargreaves said the company was finding new clients at unprecedented levels, which bodes positively for the sector at large. ( C ) Reuters