LONDON MARKETS: Banks Lift FTSE 100 To Second Day Of Gains

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- U.K. stocks rose for a second straight day on Wednesday, as banks advanced on hopes of affordability after a recent sell-off over interest-rate concerns.

The benchmark rose 1% to close at 6,165.48, adding to a 1.2% gain from Tuesday.

Shares of Aberdeen Asset Management PLC jumped 4.8% after HSBC lifted the investment firm to overweight from neutral.

"Aberdeen's share price declined by 28% since its peak in May: Uncertainty about the timing of tapering of quantitative easing (QE) in the U.S. and negative newsflow from China triggered a sharp selloff in a number of markets over the past few weeks," the analysts said.

"However, we believe that market has overreacted on the issue of performance and outflows," they added.

Banks were also climbing, rising with the broader European banking sector. Shares of Standard Chartered PLC added 1.5%, Lloyds Banking Group PLC (LYG) rose 2%, HSBC Holdings PLC (HBC) picked up 1.1% and Barclays PLC (BCS) gained 2%.

Markets in London also mirrored solid gains seen in Europe and the U.S. where investors picked up stocks recently beaten by worries that the Federal Reserve will taper its asset purchases. Data showing German consumers are optimistic about the summer also helped lift sentiment.

Among other notable movers in London, shares of Legal & General PLC climbed 2.1% after the insurance firm said it would buy Lucida PLC, a U.K. annuity buyout firm, for 151 million pounds ($232.9 million).

Shares of Croda International PLC picked up 3.1% after UBS lifted the chemicals firm to neutral from sell.

Victrex PLC got the same treatment from UBS, helping lift the shares 2.1%.

Mining firms, however, curbed the gains for the London benchmark, as most metals prices moved lower.

Shares of Anglo American PLC shaved off 3.3%, Antofagasta PLC dropped 2.1% and BHP Billiton PLC (BHP) fell 1%.

Shares of Polymetal International PLC dropped 5.7%, even as Citigroup lifted the gold miner to neutral from sell.

Shares of Direct Line Insurance Group PLC climbed 3.8% after the U.K. firm announced plans to cut costs by 130 million pounds ($200 million) and cut about 2,000 jobs.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires