Banks lead modest FTSE rally, but caution remains

Britain's leading share index pushed higher on Friday, steadying after sharp falls in the previous session supported by firmer banks after the Group of 20 major economies said they would take all steps needed to calm the global financial system.
However, the blue chip index saw an opening 1% bounce back above the 5,100 level clawed back as heavyweight miners stayed under pressure as worries over the state of the global economy knocked metal prices.
The G20 statement, which gave no details of any possible action, came as finance ministers and central bankers met in Washington, under pressure from investors to show action in the face of rising stresses in the financial system.
Part-state-owned lender Lloyds Banking Group was one of the top FTSE 100 gainers, ahead 1.8%, while global banking heavyweight HSBC added 1.6%.
"A small rebound today as opportunist traders step in and snap up 'cheap' stocks. But expect any bounce to be short-lived as those same traders are unlikely to want to hold any significant positions over the weekend," said Manoj Ladwa, market analyst at ETX Capital.
"G20 finance ministers passed up a golden opportunity to soothe the markets as talk of tackling the financial crises fell short of any decisive action. Highlighting the obvious fragility of the financial system without clear-cut measures to avert a meltdown is unlikely to instill confidence in investors.".
At 0752 GMT, the FTSE 100 index was up 15.17 points, or 0.3% at 5,056.78, having dropped 4.7% on Thursday to a five-week closing low and registering its biggest one-day percentage fall since early March 2009.
U.S. blue chips dropped 3.5% on Thursday, extending their sell-off in to a fourth day in heavy volume, and Asian stocks fell to a 16-month low on Friday, although the pledge from the G20 on financial stability helped stem the scale of the losses.
A grim economic outlook from the U.S. Federal Reserve and downbeat manufacturing data in China have heightened fears that the global economy could be heading back into recession, particularly pressuring commodity stocks on Thursday.
Energy issues rallied on Friday, led by BP up 1.2%, as the crude price pushed higher after recent falls.
But miners failed to join in the rally, with Chilean copper miner Antofagasta one of the worst off, down 2.1%, as the price of the base metal dropped nearly 5%, on course for its steepest weekly loss since October 2008 due to the bleak outlook for the global economy.
Precious metals miner Fresnillo was also a big blue chip faller, down 1.6%, as the price of U.S. gold fell by more than 1% and silver tumbled 6%.
Chip designer ARM Holdings was the biggest FTSE 100 loser, down 3.3%, while mobile telecoms heavyweight Vodafone was the top gainer, up 1.8%.
Technical analysis for the FTSE 100 index remained cautious.
"Even a short-covering rally of this size will not change the main trend to up, but it will likely serve as another opportunity to get short. Without the formation of a support base, it is highly unlikely that any rally will be able to sustain itself, especially since the main trend on the daily chart still points lower," said James A. Hyerczyk, Analyst at Autochartist.
No important macroeconomic data will be released on Friday in the UK or the U.S.