Sterling, gilts fall, stocks rise after UK data

Sterling extended losses against the dollar while gilt futures fell and UK stocks rose on Wednesday after data showed mixed data on jobs and a worsening in public finances.

Data showed the number of Britons claiming jobless benefit rose by less than expected in March, although the total unemployment number surged higher and government borrowing hit a record high, further evidence that the British economy is mired in deep recession.

That's expected to be confirmed in a much more gloomy assessment of the economy from finance minister Alistair Darling later in the day when he unveils the 2009-10 budget. In March, 73,000 people joined the dole queues, well below forecasts for a rise of 120,000 but the unemployment rate rose to 6.7 percent from 6.5 percent.

"The jobless figures were clearly better than many had expected, but any positive momentum for sterling has been undermined by disappointing numbers for the public finances, putting more pressure on the Chancellor for today's budget," said Chris Gothard, currency analyst at Brown Brothers Harriman in London.

The pound initially rose to around $1.4610 from around $1.4590 before the data. It was last down 0.8 percent at $1.4551.

The June gilt future briefly extended losses to 121.97 from 122.12 FLGM9 before the data, trading down more than half a point on the day. The 10-year cash yield rose two basis points to 3.35 percent and the two-year yield held steadier around 1.46 percent.

Britain's FTSE 100 .FTSE briefly extended gains after the data, up as much as 0.4 percent to touch 4,002.31 before retreating back below 4,000.

FTSE up in light trade ahead of budget

* Banks gain after Geithner reassurance

* Commodity stocks softer on lower commodity prices * Budget awaited at 1130 GMT

Britain's top share index rose 0.3 percent early on Wednesday as gains in banks offset weakness in commodity stocks, with investors standing back ahead of data and the budget.

In light trading, by 0759 GMT the FTSE 100 .FTSE was 11.71 points higher at 3,999.17 points after inching 3.4 points, or 0.1 percent, lower in the previous session.

The blue-chip index is down 10.4 percent this year, but up 14.8 percent since its trough set on March 9.

Miners fell as metal prices drifted lower; Rio Tinto (RIO.L), Anglo American (AAL.L), Lonmin (LMI.L) and BHP Billiton (BLT.L) lost 0.1-4.7 percent.

Britain's finance minister Alistair Darling is set to deliver the gloomiest budget in a generation at 1130 GMT, as government borrowing soars to a record high and the economy shrinks at its fastest pace since World War Two.

"All eyes are on (the budget), I don't expect there to be any surprises but it hinges on credibility and the market is very sceptical," said Philip Lawlor, chief portfolio strategist at Nomura.

Jobless data due at 0830 GMT will underline the extent to which the economy is suffering, with the ILO unemployment rate forecast to rise to 6.7 percent from 6.5 percent.

Energy stocks were also under pressure as crude hovered around the $48 per barrel mark CLc1, keeping well below the high of nearly $54 it set earlier in the month.

BP (BP.L), Royal Dutch Shell (RDSa.L), BG Group (BG.L), Tullow Oil (TLW.L) and Cairn Energy (CNE.L) fell 0.1-1.6 percent.

Banks were the biggest positive weight on the index, recovering some of the losses the previous session after U.S. Treasury Secretary Timothy Geithner indicated most banks have sufficient reserves to protect against possible losses.

HSBC (HSBA.L), Standard Chartered (STAN.L), Royal Bank of Scotland (RBS.L), Barclays (BARC.L) and Lloyds Banking Group (LLOY.L) gained 0.3-4.7 percent.

"Banks fell on fears that the stress test would highlight further weakness from banks, and Geithner allayed some of those fears," Lawlor said "But shares will continue to oscillate sharply while there is still uncertainty."

Insurers were also higher, benefiting from the slightly improved sentiment for the financial sector.

Old Mutual (OML.L), Legal & General (LGEN.L) Standard Life (SL.L) and Aviva (AV.L) gained 2.4-2.8 percent.

The Bank of England will release minutes of its April 8-9 Monetary Policy Committee at 0830 GMT.

Seven FTSE 100 companies, including BAE Systems (BAES.L), Centrica (CNA.L), Reed Elsevier (REL.L), Cadbury (CBRY.L) and Rolls-Royce (RR.L) fell after trading ex-dividend.