LONDON (Reuters) - Britain’s top share index outperformed pan-European equities on Thursday despite disappointment over first-quarter UK growth data, thanks to some positive trading updates and an improving corporate earnings outlook.
The FTSE 100 index closed 0.1 percent up at 7,040.92, compared to a 0.6 percent fall on the pan-European FTSEurofirst 300 index that took a hit from pessimism over Greece’s ongoing debt struggles.
Sterling hit a three-week low against the U.S. dollar after data confirmed the British economy grew 0.3 percent in the first quarter compared with the quarter before, disappointing many who had expected a bigger gain.
But some investors said UK equities were looking more attractive relative to the euro zone, having underperformed around Britain’s parliamentary election earlier this month.
“We continue to see value in the UK, which underperformed other European markets in the run-up to the election,” said Alan Mudie, head of investment strategy at Societe Generale Private Banking, citing the outlook for company earnings growth and current valuations.
UK mining stocks fell 0.2 percent, a drag on the commodities-heavy FTSE.
The sector is down 8 percent since May 5 as copper prices have slid to a four-week low. Investment bank Goldman Sachs said overnight that major iron ore miners were unlikely to create a cartel and agree on output cuts to shore up prices.
Leading the gainers, Britain’s biggest sporting goods retailer Sports Direct rose 4.2 percent after raising its outlook, citing lower interest charges and what it described as a prudent depreciation policy.
Europe’s biggest home retail company Kingfisher followed, up 2.2 percent after reporting a rise in first-quarter retail profit, helped by a strong performance at Screwfix which lifted sales at the group’s British arm.
“UK wage growth has started to pick up and shopping has been boosted by low inflation. Consumers now have more money in their pockets to spend on general merchandise,” said Edmund Shing, global equity fund manager at BCS Asset Management.
Construction firm Ashtead was the blue-chip index’s top loser, slipping 4.6 percent after its U.S.-listed peer United Rentals plummeted.
In other sharp movers, product-testing company Intertek Group fell 1.5 percent to 2,537 pence after Deutsche Bank cut its stance to “hold” from “buy” and lowered its price target to 2,654 pence from 2,725 pence.
Additional reporting by Alistair Smout; Editing by Alison Williams