UPDATE 1-Aberdeen leads UK FTSE higher after SWIP deal

Mon Nov 18, 2013 12:03pm EST

* FTSE 100 up 0.5 pct at 6,723.46 pts

* Aberdeen Asset Management jumps on SWIP purchase

* Chinese reform plans boost exporters such as Burberry

* Petrofac plummets on disappointing guidance

By Francesco Canepa

LONDON, Nov 18 (Reuters) - Britain's top equity index rose slightly on Monday, lifted by a rally in Aberdeen Asset Management and ambitious economic reform plans in China, a key export market for some UK blue chips.

Shares in Aberdeen jumped 14.7 percent, the biggest daily gain in five years, after it bought SWIP, Lloyds Banking Group's fund management arm, creating Europe's No. 1 listed standalone fund manager.

"In an industry that is still ripe for consolidation it pays to be big," said Alex Potter, equity research analyst at Mirabaud Securities, who expects rising profit expectations to lift the shares further in the coming months.

"Even aside from the 20 percent (earnings increase) that almost mechanistically should flow through from the deal, consensus is well underpinned."

Volume on Aberdeen stock was nearly four times its average for the past 90 days, Thomson Reuters data showed.

Shares in Lloyds, which has been trying to offload its non-core assets, advanced 1 percent.

"It's one of those win-win situations - it's the right price for Aberdeen and Lloyds have got it away from their balance sheet," said Joe Rundle, head of trading at ETX Capital.

The broader FTSE 100 rose 30.02 points, or 0.5 percent, to 6,723.46 points.

The index was further supported by bold Chinese reforms which could make the world's second-largest economy healthier and more balanced in the coming years.

Beijing's plans to find new sources of economic growth and shift to a consumer-led economy were expected to benefit companies that sell consumer goods to China, such as Burberry , which gained 1.2 percent, and Unilever, up 1.1 percent.

"They are very serious about the switch to consumption," said Alastair Winter at Daniel Stewart. "The Burberrys of this world are laughing."

But Winter cautioned that European investors would be waiting to see concrete action by Chinese authorities before taking a more bullish stance on the country.

That was highlighted by the relatively subdued reaction of the FTSE relative to Hong Kong shares, which rose by their biggest margin in two years.

Energy services firm Petrofac knocked 2.4 points off the FTSE after guiding for modest growth in 2013 and next year, raising questions over its ability to hit a key 2015 earnings target.

Petrofac's shares fell 16.6 percent, their steepest ever daily drop, in volume nearly seven times its daily average.

Analyst consensus on the stock was very positive ahead of the trading update, with 16 "buy" or "strong buy" recommendations against just two "sells" out of 26 analysts covering the stock.

"Consensus earnings are going to come down significantly in 2014, probably 15 to 20 percent," said Mark Wilson, an analyst at Macquarie Research.

"The difficulty now is that, if that happens, the company in order to hit its 2015 target has to grow earnings by 30 percent."

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