Britain's leading share index pushed higher in early deals Thursday, recovering after falls in the previous session, led by firmer banks as investors reassessed the European Central Bank's (ECB) hefty loan tender Wednesday.
At 8:47 a.m., the FTSE 100 <.FTSE> index was up 51.70 points, or 1.0 percent at 5,441.44 on the final full-day trading session before the Christmas break, having closed down 29.86 points, or 0.6 percent Wednesday.
Volumes were very thin, however, representing less than 5 percent of the 90-day daily average.
It looks like the Santa Rally has finally arrived, although given the thin volumes, lack of any news, and focus on the mince pies, it would not take much to make the market run for cover, as it did yesterday, said Mic Mills, head of electronic trading at ETX Capital.
Domestic banks were strong blue chip gainers, led by Barclays
European banks took nearly 490 billion euros in three-year cut-price loans from the ECB Wednesday, easing credit crunch worries and fears over the health of financial institutions.
More than a dozen Italian banks, including top lenders UniCredit
Italian Prime Minister Mario Monti faces a confidence vote Thursday that he called to speed up final approval of a 33-billion-euro (28 billion pound) austerity package aimed at restoring market confidence in the euro zone's third-biggest economy.
Insurers also saw strong support on hopes that the euro zone debt situation could be eased by the injection of liquidity from the ECB, with Aviva
Commodity issues benefited as investors' risk appetite improved, with integrated oils the top performing blue chip sector, led by BP
IAG TAKES OFF
Among individual blue chip gainers, International Consolidated Airlines Group (IAG)
There were just two FTSE 100 fallers, with recent blue chip newcomer Russian miner Evraz
The final reading for British third-quarter GDP is scheduled for release at 0930 GMT, with no revision expected to the provisional quarterly growth figure of 0.5 percent.
Across the Atlantic, the final reading for third-quarter U.S. GDP is also due, together with the November Chicago Fed index, and the latest weekly U.S. jobless claims, all scheduled for 1:30 p.m., and the December final Reuters/University of Michigan consumer sentiment survey, out at 2:55 p.m.
Technical analysis of the FTSE 100 index remained cautious.
If the FTSE fails to form a new higher bottom, then the possibility exists for a downside wash-out, said James A. Hyerczyk, analyst at Autochartist.
Based on the main range created by the November 25 bottom at 5,075.20 and the December 7 top at 5,631.90, a key retracement zone has been created at 5,353.55 to 5,287.86. Earlier in the week, this 50 to 61.8 percentage retracement zone stopped the market at 5,328.70. If this bottom and then the lower level of the range fail, then look out below.
(Reporting by Jon Hopkins; Editing by Hans-Juergen Peters)