Britain's FTSE makes up all its post-Brexit losses

By Alistair Smout

LONDON (Reuters) - Britain's FTSE 100 closed at its highest level since April on Wednesday, as a two-day rally recouped the losses it suffered after Britain voted to leave the European Union.

Britain's FTSE 100 settled up 219.67 points, 3.6 percent higher, at 6,360.06 points. The gains lifted the FTSE above last Thursday's close of 6,338.10.

The index had slumped as much as 8.7 percent following the vote to leave the EU, which caused the pound to plunge. Its large weighting in dollar-earning companies and firms with international exposure shielded it from the worst of the post-referendum sell-off.

The mid-cap FTSE 250 remains down nearly 8 percent since last Thursday and the pan-European STOXX Europe 600 is down nearly 6 percent.

"The blue-chips are diverse, with decent global exposure," said Manoj Ladwa, head of trading at TJM Partners. "Some of the banks and travel stocks have taken a pounding, but we've seen a big switch into sectors and stocks which are predicted to outperform, with oil companies back in vogue."

Despite the recent rally, the FTSE 100 remains down 9 percent in dollar terms.

Energy shares added 40 points to the index's rise, the biggest contribution by a sector, as oil prices jumped after the U.S. government reported a larger-than-expected weekly withdrawal from crude inventories.

Oil companies earn dollars, and other companies that get much of their revenue in dollars but report earning in pounds, such as drugmakers, have benefited as the pound slump to a 31-year low. Other defensive stocks that do in times of economic uncertainty are also popular among analysts.

GlasxoSmithKline is up 13 percent since its Friday low, and AstraZeneca is up 17.5 percent.

Gains were broad-based, however, with only three stocks in negative territory and sectors that are sensitive to economic performance also rising.

Bank stocks were among those that stabilised, on expectations the Brexit process might not start anytime soon. Financial services, which had slumped, were among the top gainers.

Britain's outgoing Prime Minister David Cameron said he had not faced overwhelming pressure to invoke Article 50 of the EU's Lisbon treaty, which would set in motion a British departure from the bloc, despite some public statements to the contrary.

The UK banking index rose 2.5 percent and the life insurance index gained 5.5 percent. Mining stocks climbed 4.6 percent, tracking a rise in metals prices.

However, banks are still down around 12 percent since the referendum.

"Traders are focusing on a more positive side and they pounce on the opportunities which have arisen from the recent sell-off and try to bag some bargains," said Naeem Aslam, chief analyst at TF Global Markets.

Tour operator TUI fell 3.8 percent after JP Morgan cut its target price on the stock.

(Additional reporting by Kit Rees and Atul Prakash, editing by Larry King)