British stocks climbed on Tuesday, rebounding from a fall in the previous session as rising mining companies helped outweigh a sharp drop in Burberry’s shares.
The blue chip FTSE 100 index was up 1 percent at 7,018.99 points by 0904 GMT, in line with a broader rally among continental European indexes.
Luxury goods maker Burberry, however, slumped 8.5 percent and was on track for its biggest daily fall in more than 4 years after reporting results, with analysts at Liberum citing weakness in its wholesale figures.
“Burberry … (has) been caught in this weaker pound increasing profits story,” Jonathan Roy, advisory investment manager at Charles Hanover Investments, said.
“There was a bit of an expectation that, if sales were flat, the currency conversion would actually create some uptick there in underlying earnings. However, we’ve seen a bit of a slowdown in sales, which has really negated any positive currency impact.”
Burberry has rallied 24 percent since the UK voted to leave the European Union in June, benefiting from a drop in sterling which makes its goods cheaper for foreign buyers.
Burberry was also joined by education publisher Pearson, which fell 4 percent after several brokers cut their price targets on the stock.
Pearson slumped in the previous session after reporting an underwhelming set of figures, and Tuesday’s fall took its losses to more than 11 percent for this week.
“Higher education is the highest margin of Pearson’s activities, and the drop through from lower sales will be significant. We do not believe Pearson will hit its £800m operating profit target, with or without FX,” Berenberg analyst Sarah Simon said in a note.
The biggest risers on the index were the mining companies, with Polymetal International, Fresnillo, BHP Billiton, Glencore and Anglo American all rising between 2 percent to 3.5 percent, tracking gains in the underlying price of copper, supported by a weaker dollar.
Publishing and events company Informa also rose, up 3.1 percent after Investec upgraded its rating on the stock to “buy” from “hold”, citing a positive impact on the firm’s earnings stream from its deal to buy U.S. information services company Penton.
[Source:- Reuters]
