LONDON (ShareCast) - Good early gains in the US and a reinvigorated banking sector have lifted London’s blue chip index by more 1%.

Hopes that American mortgage finance giants Fannie Mae and Freddie Mac won’t require a government bail-out buoyed Wall Street yesterday. Barclays, HBOS and Royal Bank of Scotland are in demand.

Non-life insurers are also doing well, with Admiral and RSA Insurance ahead, while fund manager Schroders on the up.

Kazakhmys is the biggest faller as poor weather and changes in the timing of sales hit first half revenue and earnings at the miner. Rival miner ENRC is also weak, but iron ore pellet producer Ferrexpo has added ground after revealing sparkling first half figures. Revenue and earnings were sharply higher.

Severn Trent has dropped after Goldman Sachs cut the water group to ‘sell’ from ‘neutral’ with target price down to 1,396p from 1,585p. Cairn Energy, Tullow Oil, and United Utilities are all down.

But real estate giants British Land and Land Securities improved following an article in the Financial Times that said Australian shopping centre owner Westfield had nearly filled its new White City shopping mall in west London

Tour operators TUI Travel, Thomas Cook and German airline Lufthansa are in "early discussions" to merge Condor, Germanwings and TUIfly Germany.

Full year earnings came in weaker than expected at Guinness brewer Diageo due to rising costs and lower consumer spending. Earnings per share for the 12 months to 30 June rose 7% to 59.3p, shy of forecasts

Engineering and project management firm Amec raised its margin target for 2010 and said it saw record trading performance in the first half with continuing strength in energy end markets.

Aircraft services group BBA Aviation is a heavy faller after reporting flat underlying earnings and predicting a similar second half.

Engineer Bodycote has made good on its pledge to sell its ledge to sell its testing unit and said it will return some of the proceeds from the sale to shareholders.

The acquisition of rival Alfred McAlpine helped construction and support services firm Carillion post first half results slightly ahead of expectations.

JP Morgan has initiated coverage on sweet maker Cadbury with a ‘neutral’ rating and a 710p target price.

Estate agent Savills has soared after it said demand for its consultancy and property management services remained “good” even as it reported a 41% slide in profits and weaker revenues.

Johnston Press’s revenue trends are ‘abysmal’ JP Morgan said as it shaved its target price on the newspaper publisher by a fifth to 40p.

Oil and gas exploration and production company SOCO International is once again generating operating cash inflows after selling its sole producing asset earlier this year.

Expectations of lower hydrocarbon production in the second half of 2008 prompted KBC Peel Hunt to lower its rating on oil and gas producer Premier Oil to ‘reduce’ from ‘hold’.

Profit before tax from continuing operations fell 29% to £3.6m at Branston pickle and Hovis bread Premier Foods in the first half.

Soaring fuel costs have sent Aer Lingus into the red at the half way stage and the Irish low cost airline expects to report a loss for the full year.

Marketing communication firm Aegis has achieved a “good” result for the half year but said the trading environment is becoming tougher with its revenue outlook for the second half less certain.

High oil prices and an increase in production sent first half net profit up to $71.2m at Premier Oil, 247% better than the previous year.

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