Britain's FTSE edges down ahead of growth data, RBS soars

Fri Jul 25, 2014 4:19am EDT

* FTSE 100 down 0.1 pct, investor sentiment muted on earnings

* Q2 GDP data in focus after IMF upgrades

* RBS jumps 14 pct, biggest one-day gain in four years

* BSkyB deal hits shares, Burberry weaker on LVMH

LONDON, July 25 (Reuters) - UK shares edged lower in early trading on Friday, ahead of second quarter GDP data, as investors digested a raft of corporate results and Royal Bank of Scotland enjoyed an unexpected pop from earnings.

Investor sentiment was muted across Europe, held back by disappointing earnings on both sides of the Atlantic and by a third consecutive monthly fall in the widely followed German Ifo survey of business sentiment.

Merger activity also dominated early trading, with BSkyB agreeing to pay 4.9 billion pounds ($8.3 billion) in cash to buy Rupert Murdoch's pay-TV assets in Germany and Italy. Construction companies Balfour Beatty and Carillion rallied after confirming merger talks.

The FTSE 100 index was down 0.1 percent, slightly better than Germany's DAX and the French CAC 40, while the pan-European FTSEurofirst 300 was down 0.2 percent.

A preliminary reading of second quarter British gross domestic product was in focus after the International Monetary Fund this week upgraded its forecasts for the UK economy.

"Today's first iteration of Q2 GDP could well be a good indicator of how well the UK economy is shaping up for the rest of the year," CMC Markets analyst Michael Hewson said.

Shares of RBS soared 14.5 percent, their biggest intraday gain in at least four years, after the lender released earnings a week early that were much better than expected.

Network operator Vodafone was also up 2.2 percent after saying its performance had begun to stabilise in several European markets even as a slowdown in Spain and South Africa led to another heavy drop in its key revenue measure.

Meanwhile, BSkyB fell 2.4 percent, the worst performer on the FTSE 100, with traders citing the placement of shares representing around 10 percent of the company's capital to help pay for its announced asset purchases.

Burberry fell 1.9 percent after French luxury goods group LVMH posted below-forecast second quarter sales and profits, hit by a drop in demand from China.

Another heavy faller was drugmaker GlaxoSmithKline, down 1.8 percent. The company faces new allegations of corruption, this time in Syria, where the drugmaker and its distributor have been accused of paying bribes to secure business, according to a whistleblower's email.

Publisher Pearson posted a 41 percent slump in first-half profit, reflecting increased restructuring charges, currency movements and phasing in of revenues into the second half, though an increased dividend helped the stock trade higher. (Reporting by Lionel Laurent; Editing by Catherine Evans)