Robust earnings, U.S. jobs data push FTSE to 2-month high

Fri May 2, 2014 12:03pm EDT

* FTSE 100 advances 0.2 pct

* RBS, InterContinental Hotels jump after earnings

* AstraZeneca rejects Pfizer's raised bid

By Tricia Wright

LONDON, May 2 (Reuters) - Britain's top share index hit a two-month closing high on Friday as investors welcomed strong U.S. jobs growth, with RBS and InterContinental Hotels the most notable risers on the back of robust earnings.

Shares in AstraZeneca, which have surged almost 30 percent since U.S. rival Pfizer indicated in April it wanted to buy the British drugmaker, were flat after a sweetened $106 billion takeover bid was rejected by AstraZeneca's board.

Part-nationalised Royal Bank of Scotland surged 8.2 percent after trebling its profit in the first quarter, benefiting from improved cost control and a reduction in losses from bad loans.

Jefferies said the bank's earnings were more than twice consensus estimates, with impairments 48 percent below forecast.

Also rising after robust results was InterContinental Hotels Group, which proposed a special dividend along with its strongest room revenue performance in seven quarters. Its shares jumped 8.2 percent as well.

"InterContinental has delivered a stellar performance. Growth in revenue per available room is ahead of expectation ... while the return of hotel sale proceeds in the form of a special dividend is ahead of schedule," Hargreaves Lansdown Stockbrokers equity analyst Keith Bowman said.

Non-farm payrolls showed the U.S. economy added 288,000 jobs in April, beating a 210,000 consensus forecast and fuelling the view that the world's biggest economy is regaining pace after bad weather hit growth early in the year.

RBS, IHG and the encouraging U.S. data helped lift the FTSE 100 by 13.55 points, or 0.2 percent, to 6,822.42 points, its highest close since March 4.

While flagging that the FTSE 100 has come up against strong resistance around the 6,800 level before, traders were optimistic about the UK benchmark's near-term prospects.

"Risk appetite seems to be back on the table," said Matt Basi, head of sales trading at CMC Markets.

"If we can really build a solid footing at these levels ... then there's a chance that we could really push on and have a look at that 7,000 level for the first time."

Equity markets have been buoyed in the last two weeks by a burst of deal-making and bids largely in the healthcare sector.

Shares in AstraZeneca were 0.1 percent lower at 4,768 pence on Friday after the board rejected Pfizer's revised offer of 50 pounds ($84.47) a share, saying it substantially undervalued the drugmaker. ($1 = 0.5919 British pounds) (Additional reporting by Alistair Smout; Editing by Sonya Hepinstall)

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