Financials nudge FTSE to 1-week closing high as US earnings reassure

Reuters - UK Focus

* FTSE 100 up 0.6 pct

* Upbeat Morgan Stanley, Goldman results lift UK financials

* RSA buoyed by sale of Baltics, Poland operations

* Diageo (LSE: DGE.L - news) falls after posting lower sales

* London stock market closed on Friday and Monday

By Tricia Wright

LONDON, April 17 (Reuters) - Britain's top shares rose to aone-week closing high on Thursday after upbeat U.S. results fromMorgan Stanley (Berlin: DWD.BE - news) and Goldman Sachs (NYSE: GS-PB - news) drove upfinancials and allayed investor concerns about the currentearnings season.

Morgan Stanley shares gained after it unveiled a rise infirst-quarter earnings, while Goldman Sachs advanced after itreported an 11 percent drop in profits but beat expectations.

Fund manager Schroders (LSE: SDR.L - news) , up 4.2 percent, and Barclays (Berlin: BCY.BE - news), 3.8 percent firmer, led gains in UK financials, whichhelped push the broader FTSE 100 index up 41.08 points,or 0.6 percent, to 6,625.25 points, its highest close sinceApril 10.

"The strong banking numbers are obviously a key driver,especially for the FTSE which is cyclically led, and I thinkthere's just a general sense that we might be coming into aperiod of slightly stronger numbers now," said Matt Basi, headof sales trading at CMC Markets.

Barclays (LSE: BARC.L - news) ' advance came as its Chief Executive Antony Jenkinsembarked on the third review of its investment bank, withanalysts predicting that this might lead to a cut in thedivision's size of up to 20 percent.

A fresh media report about the review gave Barclays a fillipon Thursday.

The Sky News report cited a memo sent to staff by Jenkins,in which he said he wanted to set out a clear path to build abetter Barclays that can deliver sustainable returns and growth.

"If he's (Jenkins is) being proactive about cutting jobs, Ithink that's a good thing," said Manoj Ladwa, head of trading atTJM Partners.

TURNAROUND OPTIMISM

RSA Insurance (LSE: RSA.L - news) climbed 2.3 percent after sellingoperations in the Baltics and Poland for a total of 348 millioneuros ($481 million), the latest step by Chief Executive StephenHester to turn the insurer around.

Atif Latif, director of trading at Guardian Stockbrokers,said the deal was good for RSA, valuing the units at abovemarket estimates of 16 times 2013 pre-tax profit and 1.2 timespremiums.

A drop in drinks group Diageo limited the FTSE 100'sgains. Its shares fell 3.7 percent after weakness in its Chinesemarket led to lower third-quarter sales.

The FTSE 100, which rose 14.4 percent last year, is down byabout 2 percent since the start of 2014.

The index reached a peak of 6,867 points in January, aroundits highest levels since early 2000, but has since dropped onconcerns over a slump in emerging markets and fears over falloutfrom tensions between Russia and Western powers over Ukraine.

Strand Capital managing director Kyri Kangellaris saw theFTSE stuck in a range of 6,500-6,850 points, as long as itfailed to break above its January high of 6,867 points and lastyear's peak of about 6,876.

"We're looking rangebound for the near term," he said. ($1 = 0.7243 euros) (Additional reporting by Sudip Kar-Gupta; editing by AndrewRoche)

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