LONDON MARKETS: Miners, Banks Rise In London; Retailers Slip

By Simon Kennedy, MarketWatch

LONDON (MarketWatch) -- U.K. stocks climbed Wednesday, helped by further strong gains for banks and miners, while retailers lost ground after a trading update from supermarket chain J Sainsbury PLC.

The benchmark FTSE 100 index rose 0.4% to 6,039.97 in midday trading. Other European markets also rallied, with Spanish and Italian shares showing the strongest gains after a successful Portuguese bond auction and reports that the European bailout fund could be strengthened.

Bank stocks were mostly higher, reflecting gains across Europe.

Shares in HSBC Holdings (HBC) climbed 3.6%, extending gains from the previous session, when the stock was upgraded to buy at Citigroup.

Shares in Barclays PLC (BCS) rose 2.6%, and Standard Chartered PLC added 1.7%.

Among mid-cap financial stocks, shares of Henderson Group jumped 9.9% after the fund manager said it would buy smaller rival Gartmore Group in an all-stock deal. Gartmore shares climbed nearly 11%.

Mining stocks benefited from a rise in commodity prices. Shares of Kazakhmys PLC gained 3%, and Vedanta Resources PLC added 2.7%.

On the downside, shares of several retailers declined after a trading update from supermarket chain J Sainsbury PLC .

The retailer reported a 7.5% rise in total sales for the third quarter and a 5.4% increase in comparable sales, but its shares dropped 2%.

Seymour Pierce analyst Kate Calvert said the figures appear to confirm that Sainsbury achieved the fastest growth of the major food retailers over the Christmas period. But Calvert stuck to her sell recommendation, saying that the growth is already reflected in the group's premium valuation when compared to rivals.

Among other retailers, shares of Tesco PLC dropped 1.4% and Marks & Spencer Group PLC slipped 0.5%.

Shares of mobile-telecom giant Vodafone Group PLC dropped 1.2% after the stock was downgraded to equal-weight from overweight at Barclays Capital.

House builder Barratt Developments PLC was another faller. The stock lost about 1.8% after the company reported a decline in the number of completions in the first six months of its fiscal year and said growth for the rest of the year is likely to be limited.