Britain's FTSE boosted after Ukraine rebels hand over black boxes

Tue Jul 22, 2014 3:49am EDT

* FTSE 100 up 0.6 pct

* Rebels hand over key info on downed flight

* Royal Mail falls after parcel weakness

* ARM up after earnings in choppy trade

By Alistair Smout

EDINBURGH, July 22 (Reuters) - Britain's top share index rose on Monday, buoyed by a bounce in risk-sensitive sectors after traders saw hopes of an easing of tensions in Ukraine, although individual earnings reports weighed on the market.

The FTSE 100 was up 39.66 points, or 0.6 percent, at 6,768.10 by 0729 GMT in a broad-based rise, with financials and basic materials, sensitive to appetite for risk in equities, accounting for nearly half the gains.

The sectors received a boost after Ukrainian separatists complied with calls from Western governments and handed over the black boxes of a Malaysian plan downed in Ukraine last week.

The index remains 1.6 percent off its July high, and has come under pressure as tensions between Russia and the West have mounted over Ukraine, prompting fears of an escalation to economically damaging sanctions.

"On geo-political concerns the market is quick to ease off but we see the medium term environment as positive for equities," Atif Latif, director of trading at Guardian Stockbrokers, said.

A tight 200 hundred-point trading range has developed over the last two weeks, but Latif said further gains were possible if there was an improvement in earnings.

However, postal firm Royal Mail Group fell 3.7 percent, saying it would have to rely on cost control measures and letters sales to meet full-year expectations after rising competition meant parcels revenue would be lower than anticipated.

Royal Mail reported group revenue for the three months to June 29 had risen 2 percent, led by a better-than expected performance in its letters arm.

"Investors are focusing on the weakness in its parcels unit as opposed to the strength of the letters division," Tony Cross, market analyst at Trustnet Direct, said.

The company sold off by the government to much controversy last October in Britain's biggest privatisation in decades, but Cross said that the price weakness might actually help to subdue the debate over the move.

"Shares are... still a healthy premium to the listing price, but presumably moving into territory where the discussion of taxpayer value becomes less of a political liability," he said.

Chip designer ARM was last up 1.6 percent after a choppy morning session of trade that saw them fall in early deals, as traders digested results that showed a rise in profit but also royalties that missed expectations. (Reporting by Alistair Smout; Editing by Andrew Heavens)