September 25, 2018 / 8:45 AM / 3 months ago

Oil majors help FTSE 100 rise, Next shines on brighter profit outlook

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* FTSE 100 up 0.2 pct

* Oil stocks climb as crude hits 4-yr high

* Next rises 7.9 pct after raising profit outlook

* Glencore gains on new $1 billion share buyback

* CMC Markets sinks 12 pct on income warning

By Helen Reid

LONDON, Sept 25 (Reuters) - Britain’s top share index edged up on Tuesday thanks to a surge in oil majors as crude prices hit a four-year high, while retailer Next stole the spotlight after a strong update confounded expectations.

The FTSE 100 rose 0.2 percent by 0825 GMT, boosted by energy stocks and miners.

Next shares jumped 8.5 percent to the top of the FTSE 100 after it raised its full-year profit forecast and struck an optimistic tone on a no-deal Brexit, saying it is well prepared for the eventuality.

“It is still too early to measure whether Next is gaining share as a result of retrenchment by other mid-market apparel retailers, although we expect this to be a growing feature in the medium term,” said UBS analysts.

Heavyweight oil majors Royal Dutch Shell and BP delivered the lion’s share of gains.

They rose as crude prices hit a four-year high amid looming U.S. sanctions against Iran and an apparent reluctance by OPEC and Russia to raise output to offset the expected hit to supply.

Glencore shares rose 2.9 percent after the miner launched an additional $1 billion share buyback, increasing the size of an existing buyback programme.

Overall investors were sanguine, saying strong earnings were supporting markets globally.

“At the end of the day what you need is earnings growth as the driver of market returns,” said Mark Hargraves, head of global strategies at AXA Investment Managers.

“What you would really need in order to dislocate things would be earnings to come down by 20 or 25 percent, and for that you need the economy to hit a proper speedbump. There doesn’t seem to be any reason to see that right now.”

There were some sharp moves in the mid and small-cap space.

Shares in Thomas Cook bounced back, up 5.5 percent, having fallen as much as 23 percent on Monday after a profit warning.

Real estate agent Savills rose 4.7 percent after Peel Hunt analysts raised the stock to “buy” from “hold”, saying it has fared better than rivals Foxtons and Countrywide, and business diversification meant it had reduced its UK exposure.

Among small-caps, CMC Markets shares fell sharply after the spreadbetting group said low market volatility and regulatory constraints had weighed on client trading activity, reducing its 2019 income more than previously expected.

Morgan Stanley analysts said they expected a more than 20 percent downgrade to consensus 2019 profit.

“Beyond full-year 2019, the lower start point and regulatory uncertainty we expect will drive further downgrades and caution,” they wrote.

Low & Bonar shares sank 25 percent after the construction materials maker warned on profit.

And Hotel Chocolat shares climbed 2.2 percent after the chocolate retailer reported a stronger annual profit and said it was looking to expand into new markets.

Reporting by Helen Reid, Editing by Louise Heavens

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