By Julien Ponthus
LONDON (Reuters) - UK shares underperformed their European peers on Thursday despite upbeat trading updates from BT and Smith & Nephew as optimistic news on Brexit led to a surge in the pound which acts as an accounting drag on blue chips' foreign revenues.
London's FTSE 100 <.FTSE> was down 0.2 percent at 0951 GMT, with sterling up 1.1 percent, its fourth highest rise in the last 12 months after reports a deal giving London-based financial services access to European Union markets after Brexit was nearly done.
Another drag to the British benchmark was oil prices falling and pushing index heavyweights BP
The latter reported soaring but below consensus profits in the third quarter.
"The FTSE was forced to give back some of its Halloween rally," said Connor Campbell, an analyst at Spreadex, referring to the previous session's gains.
Data showing that British factories suffered their worst month since just after 2016's Brexit vote in October did little to lift morale.
Among Thursday's fresh batch of third quarter earnings also came encouraging news for equity investors. Broker Bernstein called BT's
BT's outgoing boss said the group's recovery plan was delivering after more sales of high-end smartphones and cost savings across the business helped the telecoms company achieve higher-than-expected first half earnings.
"Overall the results are solid with steady improvements in the underlying trends", Citi analysts also commented.
Another clear winner of the early session was medical equipment maker Smith & Nephew
"This is a particularly strong performance in hips, suggesting the company is taking share," analysts at Investec wrote.
Miner BHP Billiton
(Julien Ponthus; Editing by Peter Graff)