Upbeat Lloyds Bank gives world markets a boost

LONDON - British stocks led Friday's advance in global markets after the part-nationalized Lloyds Banking Group issued a buoyant trading update, but the euro continued to founder amid renewed fears about Greek debt crisis.

In Europe, the FTSE 100 index of leading British shares was up 41.26 points, or 0.7 per cent, at 5,683.88 while Germany's DAX rose 24.89 points, or 0.4 per cent, to 6,037.20. The CAC-40 in France was 17.16 points, or 0.4 per cent, higher at 3,955.34.

Wall Street was also poised to join in the advance, which started earlier in Asia - Dow futures were up 11 points, or 0.1 per cent, at 10,728 while the broader Standard & Poor's 500 futures rose 1.2 point, or 0.1 per cent, to 1,162.50.

Helping confidence were U.S. data Thursday showing inflation remains in check and manufacturing is growing, adding to the broader impression of recovery in the world's largest economy, a major export market for Asian countries.

Boosting confidence on Friday, particularly in London, was the news that Lloyds Banking Group, which is 41 per cent owned by the British government, expects to report a profit this year as trading has so far been strong and provisions for bad assets are not as large as previously forecast. In a brief statement, the bank said that in the first 10 weeks of the year net interest margin has come in line with guidance and income growth has been good.

"An estimate of an unexpected profit in 2010, impairment charges down, margins better and cost controls coming back on the bridle-all music to shareholders' ears and also to the government," said David Buik, markets analyst at BGC Partners.

Its shares were up 9.1 per cent at 60.30 pence in late-afternoon London trading. Shares in Royal Bank of Scotland, which is more than 80 per cent owned by the British government, rose 6 per cent in Lloyds' slipstream.

Banks elsewhere were also in demand, including Germany's Deutsche Bank AG and Commerzbank AG, as well as France's Credit Agricole SA and BNP Paribas SA.

Still, the overall advance in shares was constrained by continuing worries about Greece's debt crisis.

This week has brought new signs of European indecision and discord over the Greek debt crisis and there are now mounting expectations in the markets that Greece will be forced to turn to the International Monetary Fund for aid if European leaders can't agree on a bailout plan next week.

With Germany seemingly leaning towards IMF involvement, the euro slid again Friday, trading another 0.3 per cent lower at $1.3573. As recently as Wednesday, hopes of an EU package materializing had seen the euro rise to above $1.38.

"With Athens threatening to turn to the IMF if the problem cannot be resolved internally, once again question marks are lingering over what this means for the euro and with little else in the way of fundamental data to work on, some traders do seem to be getting nervous once again," said Ben Potter, a research analyst at IG Markets.

Earlier in Asia, Japan's Nikkei 225 stock average reversed early losses to climb 80.69 points, or 0.8 per cent, to 10,824.72. South Korea's Kospi rose 0.7 per cent to 1,686.11 and Hong Kong's market rose 0.2 per cent to 21,370.82.

Elsewhere, Shanghai's market added 0.7 per cent, Australia's index ticked 0.2 per cent higher and Taiwan's market rose 0.2 per cent.

Oil prices were lower, with the benchmark contract shedding 57 cents to $81.63 a barrel. The contract lost 73 cents overnight.