Financials help FTSE 100 off 10-month lows

By Julien Ponthus and Kit Rees

LONDON (Reuters) - Britain's major share index came close to recovering from a brutal global sell-off on Wednesday, rising from 10-month lows as shares in financials gained ground.

The FTSE 100 (.FTSE) was up 1.9 percent at 7,279.42 points at its close, in line with a bounce across other European bourses.

However, investors were still cautious given that the FTSE dropped 2.6 percent on Tuesday, its sixth straight session of declines.

"Whilst we don’t expect this sell off to continue for an extended period of time, given that the fundamentals remain strong and unchanged, it is difficult to call the bottom and judge whether stocks have fallen sufficiently for investors to see value once again," said Fiona Cincotta, market analyst at City Index, said.

Financials, which were badly hit during the sell-off as they tend to be more volatile than other sectors, added the most points to the index.

Old Mutual (OML.L), HSBC (HSBA.L), Barclays (BARC.L), Prudential (PRU.L) and Lloyds (LLOY.L) rose between 1.7 percent to as much as 5.4 percent.

Investment trust Scottish Mortgage (SMT.L) was the top riser, up 6.7 percent and recovering all of the previous session's losses after the sell-off in U.S. tech stocks took its toll on the fund, whose top holdings include Amazon and Tesla.

Oil majors BP (BP.L) and Royal Dutch Shell (RDSa.L) also contributed to lifting the index, both rising around 2 percent.

Africa-focused oil and gas producer Tullow Oil (TLW.L) was up 1.4 percent after it reported a surprise annual operating profit after three years in the red.

Defensive sectors such as utilities, consumer staples and telecoms were also in favour among investors.

United Utilities (UU.L) rose 3 percent while Vodafone (VOD.L) gained 2.3 percent and Diageo (DGE.L) added 2.5 percent.

In the retail sector, Tesco (TSCO.L) suffered limited damages, up 1.3 percent, after it was reported it faced Britain's largest equal pay claim with a possible compensation bill of up to 4 billion pounds.

"Investors may take some time to really assess this as it has come out of the blue, but it appears to be a serious claim and one that clearly poses downside risks to the stock," commented ETX Capital's Neil Wilson.

Rio Tinto (RIO.L) rose just 0.9 percent, after it handed shareholders a record annual dividend as stronger commodity prices helped the miner to its highest annual profit in three years.

British housebuilder Redrow (RDW.L) was up 5.4 percent after it reported a 20.4 percent rise in first-half revenue and increased its interim dividend by 50 percent.

(Reporting by Julien Ponthus and Kit Rees; editing by Mark Heinrich)