By Sudip Kar-Gupta
LONDON (Reuters) - Britain's top equity index rebounded on Tuesday, helped by stronger mining stocks, although its advance was curbed by a drop in banking shares such as Standard Chartered <STAN.L> and Lloyds <LLOY.L>.
The blue-chip FTSE 100 index <.FTSE> was up by 0.4 percent at 6,388.77 points by the middle of the trading session after a 0.4 percent decline on Monday.
Mining companies such as Glencore <GLEN.L>, BHP Billiton <BLT.L> and Rio Tinto <RIO.L> added the most points to the FTSE. The FTSE 350 Mining Index <.FTNMX1770> rose 1.4 percent after the price of copper neared a two-week high.
However, banks retreated. Standard Chartered slumped nearly 10 percent to a five-year low after the Asia-focused bank warned investors of lower second-half profits. Its quarterly earnings were hit by a surge in bad loans and higher regulation and compliance costs.
"Not only has credit started to deteriorate and will be the driver of the next earnings downgrade cycle, but volume, revenue and cost trends are weak," said Joseph Dickerson, an analyst at Jefferies, as he commented on Standard Chartered's results.
Part-nationalised bank Lloyds fell 2.4 percent after it took a 900 million-pound ($1.5 billion) charge for compensating customers who were mis-sold loan insurance. It was another blow to a bank that only narrowly passed a stress check by European regulators.
BP'S PROFITS DROP
Shares in BP <BP.L> also made little progress. Its decision to raise its dividend was offset by a decline in profits, as oil prices fell and Western sanctions led to a drop in income for BP's Russian partner, Rosneft <ROSN.MM>.
The FTSE 100 hit a peak of 6,904.86 points at the start of September, its highest since early 2000. Then it slumped to 15-month lows in October as weak European economic data knocked back stock markets.
Nevertheless, Logic Investments' trading director Darren Easton expects the FTSE to climb going into the end of 2014, adding he would look to buy into the FTSE at current levels.
"We're bullish in the immediate term. There may be one more pullback to come, but the FTSE should get back to somewhere near the earlier year-highs by the year-end," said Easton.
(Additional reporting by Francesco Canepa and Steve Slater; Editing by Larry King)