British shares rose on Thursday, with banks recovering on relief that Spain had drawn solid at a bond sale but gains could be fragile as a rise in yields suggested investors were still nervous about Spanish finances.

Takeover target C&W Worldwide was the biggest FTSE 250 <.FTMC> loser, skidding 23 percent after India's Tata Communications bowed out of the race for the British cable company on Wednesday, leaving a possible offer from British telephone giant Vodafone as the only bid hope.

The deadline for Vodafone to launch a bid for C&W Worldwide is 4.00 p.m. British time on Thursday.

Banking stocks <.FTNMX8350> recovered after heavy losses on Wednesday as Spain's sale of 2.54 billion euros of 2-year and 10-year government bonds eased some fears about the euro zone debt crisis. Worries about Madrid's ability to meet its deficit targets persist though which means banking shares are likely to remain vulnerable, analysts say.

HSBC Holdings was up 0.6 percent and Standard Chartered rose 0.8 percent.

The banks seem to be holding steady, the news that the bond auction in Spain was seen as successful in terms of the take-up and helped push banks slightly further forward, said David Corben, financial trader at Spreadex.

At 1155 GMT, the FTSE 100 <.FTSE> index was up 0.7 percent at 5,781.15, having shed 0.4 percent in the previous session following strong gains on Tuesday.

Miners <.FTNMX1770> also saw good demand as investors took a more risk-on approach following the Spanish debt auction, with the sector extending gains sparked on Tuesday by upbeat comments on global growth from the International Monetary Fund (IMF).

The markets will now be looking to the IMF meetings (this weekend) and (to) the amount they will raise the European Stability Mechanism (ESM) by, with projections of around $600 billion (374 billion pounds) although I think around $400 billion (249 billion pounds) (is more likely), said Duarte Caldas, market strategist at IG Capital.

U.S. stock futures for the S&P 500 <.SPX> were down 0.4 percent, pointing to a lower open on Wall Street, with investors set to focus on more corporate earnings and U.S. data.

The latest U.S. weekly jobless claims due at 1230 GMT, and March existing home sales, March lead indicators, and the April Philly Fed index were all due at 1400 GMT.


Hargreaves Lansdown led the blue chip gainers, rising 4.9 percent after the investment manager said in a statement its assets under management increased by 2.6 billion pounds to 26 billion pounds in the first quarter, brushing off jitters on the euro zone economy.

The FTSE 250 index <.FTMC> was up 0.3 percent, with mid caps underperforming their blue chip peers.

Retailers featured among the mid cap fallers, with WH Smith losing 1.7 percent after it posted a 5 percent slip in first-half like-for-like sales, although its pretax profit rose 3.1 percent to 66 million pounds.

WH Smith said it expects the trading environment to be challenging, although it saw opportunities for growth in the UK and internationally.

Home Retail Group , which owns the Argos chain, shed 2.1 percent as Bernstein Research started coverage of the firm with an underperform rating in a cautious review of the European general retail sector.

Although we also expect an improving outlook relative to 2011, valuation seems to be anticipating further improvement in consensus estimates that we believe is unlikely to occur, given rising fuel prices and unemployment, and (we) launch with a negative stance on the sector, Bernstein said in a note.

(Editing by Susan Fenton)