Earnings in focus as FTSE finds support in weaker pound

  • Reuters
  • Stock Market News
Earnings in focus as FTSE finds support in weaker pound
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* FTSE 100 up 0.3 percent, helped by weaker pound

* Unilever gains after results, confidence on target

* Utility SSE, engineer Babcock down as updates disappoint

By Danilo Masoni

MILAN, July 19 (Reuters) - Earnings updates were the main focus for investors in British shares on Thursday as the country's top FTSE 100 index inches higher, although remaining within recent tight ranges on caution over the outcome of Brexit talks.

The FTSE .FTSE rose 0.3 percent by 0856 GMT, reversing earlier slight losses after a retail sales growth in June rose less than expected, depressing the pound and supporting shares in export oriented companies. The more domestically focused mid cap index FTSE 250 .FTMC fell 0.5 percent.

Shares in companies that benefit from currency weakness due to their overseas exposure rose with British American Tobacco BATS.L and Compass Group CPG.L both at session highs, up 1.2 percent and 0.7 percent respectively.

Unilever ULVR.L lagged other internationally exposed stocks after the consumer goods maker reported lower-than-expected second quarter sales, hurt by a Brazilian transport strike and weak pricing, although profits beat expectations on higher margins.

"Unilever missed its first half sales growth target due to strikes in Brazil but overall the picture remains positive," said Neil Wilson, chief market analyst at Markets.com.

"Overall there was more good progress on margins... No reason to think the group cannot achieve its target of 20 percent by 2020. But the focus now is on the move out of London, which shareholders will vote on in October," he added.

Its shares fell as much as 1.2 percent but recovered, also helped by the fall in the pound.

Among the top fallers was SSE SSE.L , down 2.9 percent after Britain's second-largest energy supplier lost more customers in the first quarter, while advertising giant WPP WPP.L fell 3 percent after a disappointing update from its French peer Publicis.

Engineer Babcock BAB.L fell 9.6 percent after it cut its revenues growth outlook on delays in government spending, while price comparison website Moneysupermarket MONY.L rose 7.8 percent following solid results and signs its growth strategy is working.

On Thursday mining stocks, recently hit by concerns that a trade war could slow global growth, hurting demand, were broadly lower as metal prices fell MET/L

The FTSE 100 index has been moving broadly sideways over the past few weeks as Prime Minister Theresa May struggles to keep her cabinet united ahead of a March 2019 deadline to leave the European Union.

Increased uncertainty over Brexit following high profile government defections earlier this month have also cast a doubt over expectations the Bank of England will raise interest rates at next month's policy meeting.

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