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Europe: Burberry leads FTSE 100 higher, mid-caps glide over sterling slip


[BENGALURU] 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 added 0.6 per cent, its best day in nearly 2 weeks, outperforming the broader European markets.

Gains in easyJet and Aston Martin helped the domestically-focused FTSE 250 advance 0.4 per cent, despite a hit to the local currency from mounting Brexit jitters.

Luxury brand Burberry jumped more than 15 per cent 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," analyst Neil Wilson said, as the company's revenue growth in China and across Asia improved.

Airline stocks climbed after Ryanair said deliveries of Boeing's 737 Max planes may be delayed further, raising the prospects of easing over-capacity in the European market.

"It's just that reduced capacity is what is required for the industry - improved pricing environment which should be supportive of margins," Mr 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 gained 2.6 per cent each.

EasyJet added 5.4 per cent and was the biggest boost to the FTSE 250. Luxury automaker Aston Martin advanced 7.6 per cent after a rating upgrade from Jefferies and a bullish view from Goldman Sachs.

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 per cent this year while the pound has slipped 2.7 per cent.

The currency slumped on Tuesday to a 27-month low against the US 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 per cent. Mr Wilson cited this to speculation that its proposed rescue deal with Fosun Tourism , which would significantly dilute the stakes of other shareholders, may not go through.

Mid-cap A.G.Barr 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 per cent compared with last year.

Fellow soft-drink makers Fevertree, Britvic and Nichols fell between 1.3 per cent and 3.6 per cent.