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FTSE joins European bounce as eyes turn to May speech; Tesco drops

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FTSE joins European bounce as eyes turn to May speech; Tesco drops

FTSE joins European bounce as eyes turn to May speech; Tesco drops
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Luke MacGregor(Reuters)
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By Danilo Masoni

MILAN (Reuters) - The UK's top share index rose on Wednesday as the pound held near recent lows before a speech from Prime Minister Theresa May, while Tesco fell after a disappointing update.

The FTSE 100 <.FTSE> rose 0.4 percent to 7,504 points by 0820 GMT, tracking gains across European markets which bounced on easing worries over Italy's budget targets.

Weakness in the sterling helped prop up the internationally exposed index with big multinationals British American Tobacco <BATS.L> and GlaxoSmithKline <GSK.L> both up 0.8 percent.

The FTSE's companies derive 70 percent of their earnings from abroad and a weaker sterling is typically a boost

"Brexit will continue to be the principle driving force for sterling. All eyes will be on Theresa May as the Conservative party annual conference enters into its final day," said Jasper Lawler, analyst at London Capital Group.

May will tell her Conservative Party on Wednesday that the impending divorce from the European Union is an opportunity that opens up a future full of promise.

The domestically focused mid cap index <.FTMC> also rose but only by 0.2 percent. A survey showing the services sector kept up its steady growth in September had little impact on stocks.

Tesco <TSCO.L> fell 7.6 percent to its lowest since April.

Britain's biggest retailer undershot first-half profit forecasts as weak trading in central Europe and Asia took the shine off accelerating sales in its UK business.

"Half year profits missed expectations, but same store sales and margins improved and this, on the whole, can be seen as another positive set of interims from Tesco," said Neil Wilson, analyst at Markets.com.

"This looks rather like expectations had maybe been set a little too high, rather than Tesco underperforming," he added.

Losses in Tesco were more than offset by strength across most sectors with banks and miners among the biggest gainers.

Aston Martin <AML.L> fell 4.7 percent on its stock market debut after the luxury carmaker priced its shares at 19 pounds each, giving it a valuation of $5.6 billion.

Among smaller companies, exhibition organiser ITE Group <ITE.L> fell 4.5 percent after the company said currency market volatility would likely hit its results next year.

(Reporting by Danilo Masoni; Editing by Andrew Heavens)

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