U.K. stocks rise as financial stocks gain

LONDON (MarketWatch) � Financial-sector stocks rose sharply in London, pushing Britain�s benchmark stock index into positive territory for a second day.

The FTSE 100 UK:UKX �rose 1.9% on Wednesday to 5,790.7. London�s equities benchmark added 0.2% in the prior session to post its first gain in three, after positive earnings data lifted sentiment.

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Markets received another boost early Wednesday courtesy of manufacturing data from Germany and the euro zone. Germany�s manufacturing PMI rose to 51.0 from 48.8 in December, while a similar survey for the euro zone reached 48.8 from 46.9, topping an earlier estimate of 48.7.

Mark Hodds, head of execution at Oriel Securities, said that for the moment investors are feeling optimistic about the global economy, even though uncertainties remain.

�After a couple of days of retrenchment... [investors are looking at] the U.S. economy ticking up and a soft landing in China,� Hodds said. �Bad news is being discounted.�

Among individual stocks, ICAP PLC UK:IAP �rallied 7.7%.

The financial-services firm issued a trading update. ICAP said that revenue from continuing operations fell 7% in the third quarter compared with the year-earlier figure but that pre-tax profit for the fiscal year ending March 31 would be toward the upper end of analysts� current range of �336 million ($530 million) to �358 million.

ICAP�s results lifted other financial stocks, particularly Schroders PLC UK:SDR , which leapfrogged ICAP to top the index. Schroders gained 8.7%, Man Group PLC UK:EMG �moved up 5.2% and Hargreaves Lansdown PLC UK:HL �rose 2.8%.

/quotes/zigman/3173262 UKX 5,267.62, -70.76, -1.33%

Banks also ended in positive territory, with Barclays PLC UK:BARC �BCS �leading the pack, up 5.4%. Shares of Lloyds Banking Group PLC UK:LLOY ��LYG �climbed 5.2% as HSBC Holdings PLC UK:HSBA �added 2.3%.

Resource stocks pushed higher as well, with heavyweight Rio Tinto PLC UK:RIO �climbing 2.8% and Xstrata PLC UK:XTA �advancing 4.2%. In the oil sector, BP PLC UK:BP �BP �rose 2.6% and BG Group PLC UK:BG �tacked on 1.4%.

Imperial Tobacco Group PLC UK:IMT �also released a trading update and said tobacco net revenue declined by 1%. Imperial Tobacco�s shares added 1.5%.

On the negative side, microchip designer ARM Holdings PLC UK:ARM �dropped to the bottom of the FTSE benchmark, down 2.8%. ARM finished 2% up in the previous session, after reporting record fourth-quarter revenue.

British Sky Broadcasting Group PLC UK:BSY �also declined a day after it posted strong first-half results. BSkyB�s shares fell 1.2%.