(Reuters) - London’s main index rose on Tuesday as Burberry scaled an 11-month high after its first-quarter update showed new designs boosted sales, and a weaker sterling aided exporter stocks, while mid-caps rose in a rare break from the domestic currency.
The FTSE 100 .FTSE added 0.6%, its best day in nearly 2 weeks, outperforming the broader European markets.
Luxury brand Burberry (BRBY.L) jumped more than 15% on its best day ever, after it posted a stronger-than-expected rise in first-quarter comparable-store sales and affirmed its annual forecast.
“The big question facing Burberry has been to what extent the Chinese consumer is reining in their luxury buying ... Not so much, it seems,” Markets.com analyst Neil Wilson said, as the company’s revenue growth in China and across Asia improved.
“It’s just that reduced capacity is what is required for the industry - improved pricing environment which should be supportive of margins,” Wilson said.
Shares in Europe’s largest budget carrier, which cut its forecast for growth in traveller numbers next summer, and British Airways owner IAG (ICAG.L) gained 2.6% each.
The mid-cap index has broken ranks with sterling, defying its positive correlation with the UK’s domestic currency. The index is up 12.3% this year while the pound has slipped 2.7%.
The currency slumped on Tuesday to a 27-month low against the U.S. dollar amid increasing concerns of a chaotic, no-deal Brexit.
Tour operator Thomas Cook, whose shares lost more than half their value last week, surged 11%. Wilson cited this to speculation that its proposed rescue deal with Fosun Tourism (1992.HK), which would significantly dilute the stakes of other shareholders, may not go through.
Mid-cap A.G.Barr (BAG.L) lost more than a quarter of its value on its worst day ever, after the Irn-Bru maker warned that its annual profit would sink 20% compared with last year.
(For a graphic on 'Sterling vs FTSE 250', click tmsnrt.rs/2k1K18R)
Reporting by Shashwat Awasthi in Bengaluru and Josephine Mason in London, additional reporting by Muvija M and Yadarisa Shabong; editing by Arun Koyyur and Ed Osmond