Banks lead UK stocks up as earnings provide lift

* FTSE 100 index up 0.5 percent

* Banks lead the way after encouraging Lloyds results

* BG Group continues to weigh on oil and gas

LONDON, Nov 1 (Reuters) - UK shares gained on Thursday, led

higher by banks after encouraging results from Lloyds,

as more positive reports from companies across the index

prompted a rebound from the previous session's falls.

Lloyds Banking Group added 6.2 percent after results which

revealed that the bank's exposure to bad debt had fallen,

helping bring up other banks such as Barclays, which

had released disappointing results in the previous session.

"It's financials that are the story today," Arthur Gordon,

co-head of UK sales at Canaccord Genuity, said.

"Some of the stocks that got carried away, like Barclays and

Standard Chartered have been brought back into line a

bit. I still think there's value there in the banks." Barclays

and Standard Chartered gained 2.6 and 1.2 percent respectively.

At 1135 GMT, the FTSE 100 index was up 30.80 points,

or 0.5 percent at 5,813.50, with banks alone adding

over 11 points.

The ongoing earnings season provided a lift across other

sectors too, helping the FTSE reverse some of Wednesday's 1.2

percent drop following a string of gloomy earnings and outlooks

from firms such as BG Group, Barclays and

GlaxoSmithKline.

Telecoms firm BT Group was the top individual FTSE

100 gainer, up 6.6 percent. Despite missing expectations for

second-quarter revenues, EBITDA was in-line, and earnings were

slightly ahead.

"Overall we believe much of the revenue weakness had been

expected and there may be some relief that it is not worse, and

that BT has been able to save most of it through cost

reductions," Espirito Santo Investment Bank said in a note.

Pay-TV and telecoms provider BSkyB also saw strong

demand, up 4.9 percent in volume of 1.5 times its 90-day

average, as its first-quarter earnings rose 16 percent, with

Numis Securities hiking its rating for the stock to "buy" from

"add".

Despite expectation-beating results for from Royal Dutch

Shell, which added 1.1 percent, energy stocks

were flat, as gains across the sector were

countered by further hefty falls from BG Group.

After plunging nearly 14 percent on Wednesday following a

cut in production outlook with its results, BG shed another 4.4

percent, chopping over 6 points off the blue chip index.

"The press this morning wasn't especially positive. The

stock is going through a derating process at the moment,"

Canaccord's Gordon said, also noting that Shell's proposed

dividend was disappointing compared to BP's, which was

announced earlier in the week.

Chemicals firm Croda International was also a big

blue chip faller, dropping 3.5 percent in volume of over twice

its 90-day daily average, after it said trading weakened in

September, with month-on-month trading volatile.

(Additional reporting by Jon Hopkins; Editing by Toby Chopra)

Source: http://news.yahoo.com/banks-lead-uk-stocks-earnings-lift-121335989--business.html

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