UPDATE 1-Britain's FTSE stages recovery as investors seek safety

  • Reuters
  • Stock Market News
UPDATE 1-Britain's FTSE stages recovery as investors seek safety
Credit: © Reuters.

* FTSE 100 reverses losses to close up 0.3 pct

* Gains 0.8 pct on the week

* FTSE 250 notches up losses for 4th straight week

* U.S. dollar lifts multinationals

* Intu jumps on takeover bid

* Pendragon sinks 10 pct after warning, drags down Inchcape (Add details, updates prices)

By Josephine Mason

LONDON, Oct 19 (Reuters) - Britain's top share index closed higher on Friday as a stronger U.S. dollar boosted multinational stocks, higher oil prices lifted energy majors and investors sought safety in utilities and companies deemed less risky amid economic uncertainty.

The gains helped offset weakness in property stocks and travel sector as weak earnings reports and broker downgrades deepened concerns about a slowdown in the sectors.

After a choppy day's trading the FTSE 100 .FTSE clawed back earlier losses to close up 0.5 percent as a strengthening U.S. dollar boosted exporter stocks, which became the biggest weight on the index.

The index rose 0.8 percent on the week, recouping some of the ground lost in last week's dramatic sell-off and outperforming European stocks .STOXXE .

Defensive, high-yielding stocks, including consumer staples and healthcare, also gained as investors grew more cautious after weak results from construction and auto companies, and as Brussels prepares for a showdown with Italy's populist government over its budget.

Oil majors BP BP.L and Shell RDSa.L climbed, Reckitt Benckiser RB.L topped the gainers with a 3.8 percent for its best day in nearly three months, and GlaxoSmithKline GSK.L jumped 3.1 percent.

With earnings season in full swing, investor sentiment has grown increasingly gloomy this week though, with few examples to give much cheer.

Intercontinental Hotels Group's IHG.L weaker-than-expected revenue added to the downbeat mood and stirred concerns about the cooling travel sector, even after the hotel chain said it would return 500 million euro ($572 million) to shareholders through a special dividend. shares were down 3.5 percent after hitting their lowest in more than a year.

"Revenue per available rooms is a little lower than hoped for, largely as a result of weak occupancy numbers in the U.S.," said Nicholas Hyett, equity analyst at Hargreaves Lansdown (LON: HRGV ).

"With IHG rapidly expanding its rate of room growth, including some sizable acquisitions and new brand launches, lower revenues are far from welcome."


Broker moves drove other shares. Budget airline EasyJet Plc EZJ.L was the biggest faller, down 6.3 percent, after a MainFirst downgrade.

Dechra Pharmaceuticals DPH.L was one of only a few gainers on the mid-cap FTSE 250 .FTMC after Stifel upgraded the stock to buy.

Otherwise, weak earnings took centre stage on the domestically focused index, which ended down 0.8 percent and notched up its fourth straight weekly loss. Industrials were the biggest drag.

Precision engineering group Renishaw Plc RSW.L topped the loser board, touching its lowest level in more than a year and down 6.8 percent after Stifel cut the stock to sell after the company reported on Thursday lower-than-anticipated quarterly margins.

"At the same time, we think that evidence continues to gather of slowing trends in key Chinese/Asian industrial and electronics capex and robotics markets," the analysts said in a note. M&A news, retail property developer Intu Properties INTUP.L surged 13 percent to lead the FTSE 250 after saying it was considering a 215 pence takeover offer from a consortium led by its deputy chairman John Whittaker and Saudi Arabian and Canadian investors. shares were still below the offer price at 200 pence.

Small caps were also hit by earnings news. Auto retailer Pendragon PDG.L slid 8 percent after warning that new emissions rules will dent results. news dragged mid-cap car dealership Inchcape INCH.L down 4.6 percent to its weakest in more than five years.

($1 = 0.8734 euros)

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