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FTSE lifts on earnings optimism

Tuesday, March 25 09:40:07

UK shares rose today, rebounding off of a six-week closing low, after easyJet and Kingfisher reported updates that raised optimism about the outlook for corporate earnings this year.

Budget airline easyJet jumped 5.1 percent after it upgraded its first-half outlook by 25 percent on Tuesday, helped by tight cost control and the popularity of its allocated seating programme.

It was followed closely on the FTSE 100 leaderboard by Kingfisher, Europe's largest home improvements retailer.

Kingfisher gained 4.6 percent after it said it would return about 200 million pounds ($330 million) to shareholders in the current year after meeting forecasts with a 4.1 percent rise in 2013-14 profit.

British plumbing supplies group Wolseley also gained after its own corporate update, up 2 percent after strength in its U.S., British and Nordic operations lifted its profit.

"Most of the figures out today seem to be broadly positive, with Wolseley, easyJet and Kingfisher all reading pretty well. There's a raft of good corporate figures which point to a good economic backdrop," Joe Rundle, head of trading at ETX Capital, said.

They helped the FTSE 100 index rise 1 percent, or 64.78 points to 6,585.17 by 0840 GMT.

Only five stocks were in negative territory on the whole index. Royal Mail Group fell 1.6 percent after announcing 1,300 job cuts, with traders also highlighting light letter volumes.

"Royal Mail will be all over the headlines for the wrong reasons tomorrow (but) have made what I think is the right move in the longer term," Rundle said.

Market gains lifted the FTSE away from its lowest close since Feb. 5, although it remained 4 percent off a 14-year closing high struck on Feb. 24.

The stock market has suffered from concerns about developments in Ukraine, as the G7 warned Moscow of more sanctions should Russia destabilise its neighbour further.

Signs that China's growth is slowing has also dampened market sentiment, particularly mining stocks, but they rebounded on Tuesday as London copper edged up to its highest in nearly a week on hopes China will act to support its economy after a survey showed manufacturing contracted in the first quarter.

Credit Suisse reduced its overweight on equities, citing China as its "biggest global macro concern", but said it should grow enough for equities to continue to look attractive.

"Only sub-5 percent GDP growth would lead us to underweight equities ... for now, we think that China has the policy power to avoid sub-5 percent GDP growth," strategists at Credit Suisse said in a note. ( C ) Reuters