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Sterling holds back Britain's FTSE ahead of Brexit trigger; Wolseley soars
March 28, 2017 / 9:31 AM / 9 months ago

Sterling holds back Britain's FTSE ahead of Brexit trigger; Wolseley soars

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* FTSE 100 up x.x pct

* Wolseley surges after results

* Miners, banks recover

By Kit Rees

LONDON, March 28 (Reuters) - Britain’s top share index traded flat on Tuesday, underpinned by a recovery in miners and banks as well as a surge in Wolseley’s shares following strong results, though sterling strength capped gains.

The FTSE 100 was flat at 7,291.96 points by 0910 GMT, slightly underperforming a positive broader European market.

The index hit a one-month low on Monday as equity markets sold off when a failed U.S. healthcare bill cast doubts as to whether President Donald Trump could deliver on his other campaign promises, such as tax reform and infrastructure spending.

A stronger pound, however, put pressure on the FTSE, whose dollar-earnings constituents have enjoyed support from sterling weakness since the Brexit vote last June.

On Wednesday, Prime Minister Theresa May will trigger Britain’s withdrawal from the European Union.

“Most of the (UK) economic downside is largely already priced in, which would suggest that as long as we stay above the recent lows then the risk remains more to the upside than the downside,” Michael Hewson, chief market analyst at CMC Markets, said in a note.

Shares in Wolseley were the biggest gainers, up 6.4 percent and almost hitting a decade high after reporting a strong set of first-half results.

The heating and plumbing products supplier posted a 25 percent rise in first-half profit as growth in the United States more than offset tough trading conditions in Britain and the Nordics.

The company said it plans to change its name to Ferguson Plc, its top brand in its largest market, the United States.

“We believe the market could view these steps ultimately to attempt to unlock the multiple discrepancy between the U.S. listed peers and Wolseley,” analysts at UBS said in a note.

Insurer Aviva was another top FTSE gainer, rising 1.1 percent after saying it was looking to sell its Friends Provident International unit for up to $750 million, according to a media report.

A price target upgrade from Jefferies also helped the stock.

“2016FY marked the third reporting day in a row where Aviva’s share price rose by 7 percent, confirming Aviva as the current momentum play within the UK insurance sector,” analysts at Jefferies said in a note.

“We raise our price target by 14% to 600p reflecting share buyback confirmation and our increased confidence in management’s capital reallocation and earnings growth plans.”

A rebound in British mining and banking stocks also helped to cap losses, with lender Standard Chartered and miner Rio Tinto among top gainers.

British midcaps, however, underperformed, with the FTSE 250 down 0.1 percent.

The biggest faller was OneSavings Banks, which dropped 5.8 percent after investor J.C. Flowers sold a 10 percent stake. (Editing by Robin Pomeroy)

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