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Europe: FTSE 100 rises, led by Just Eat, BP, while sterling sinks

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[LONDON] British shares rose on Tuesday as data showed manufacturing growth slowed to a 17-month low, sending the pound lower and boosting dollar-earning companies.

The data was the latest in a run of weak economic indicators, making it less likely the Bank of England would raise interest rates when it met next week.

Markets now indicate around a 16 per cent chance of a rate increase this month, down from 90 per cent in early April.

The FTSE 100 ended the first day of May up 0.2 per cent to 7,520.36 points. Oil major BP added the most points, rising 1.3 per cent after reporting profit jumped 71 per cent in the first quarter.

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Food delivery group Just Eat rose the most, gaining 4.1 per cent after reporting first-quarter revenues. Liberum analysts said the trading update showed Just Eat's annual sales would probably be higher than expected.

Cigarette maker British American Tobacco suffered the biggest loss on the FTSE, down 2.4 per cent after broker Piper Jaffray downgraded the stock to "neutral" from"overweight".

Healthcare stocks were the strongest sector, led by Astrazeneca with a 2.2 per cent rise. Shire and GSK also gained after shares in US pharmaceutical giant Merck declined even though first-quarter earnings beat forecasts .

British insurer Aviva rose 1.4 per cent after announcing a 600 million-pound (S$1.09 billion) share buyback, as part of a 2 billion-pound capital deployment plan.

Overall, analysts noted the drop in the pound had less impact on the FTSE 100, suggesting the negative relationship between the two has weakened. When inflation and interest rates are rising, the negative correlation has historically tended to ease or even reverse.

In Copenhagen, the other European market open for trading on May Day, Danish brewer Carlsberg rose 0.4 per cent after reporting a 5 per cent fall in sales in the first quarter, hurt by currency moves and lower volumes in its key Russian market.

The latest consequence of US sanctions on Russia was felt when the London Stock Exchange said it would suspend trading in global depositary receipts of Russian aluminium and power producer En+ on May 2 at 1615 GMT. US sanctions had named both the company and its owner, Oleg Deripaska.

Among smaller stocks, Johnston Press jumped 9.2 per cent following CEO Ashley Highfield's resignation, after more than six years at the publisher of The Scotsman and The Yorkshire Post newspapers.

Spread-betting company Plus500 jumped 5.8 per cent as it reported a five-fold gain in its first-quarter core earnings on Tuesday, helped by customers seeking to cash in on the crypto-currency boom.

Challenger bank Virgin Money rose 6.5 per cent after it published strong credit performance and better-than-expected deposit growth figures.

REUTERS