* FTSE 100 index gains 0.3 percent
* China’s growth data slightly above forecasts
* Sports Direct surges on bullish broker note
By Atul Prakash
LONDON, April 16 (Reuters) - Britain’s benchmark stock index edged up on Wednesday after Chinese growth data came in a touch above forecasts, while results lifted Tesco shares and a positive broker note boosted Sports Direct.
The sportswear retailer surged 5.8 percent to the lead FTSE 100’s gainers, with traders citing a bullish note on the stock from Bank of America Merrill Lynch.
The bank said Sports Direct had potential to grow its top line at a compound annual growth rate (CAGR) of 7 percent over the next ten years, driven by online sales and expansion into Europe, traders cited the note as saying.
The market was broadly helped by data showing China’s economy grew 7.4 percent in the January-March quarter from a year earlier, slightly better than a forecast of 7.3 percent. Activity data for March showed retail sales were a shade above forecasts with an annual rise of 12.2 percent.
“Investors have taken Chinese growth numbers positively, but they are cautiously optimistic as defensive sectors are in favour today,” Coutts global equity strategist James Butterfill said.
“Aside from some possible seasonal weakness in May, we like equities. We are positive on healthcare stocks, which remain good value with an attractive dividend yield,” he said.
Pharmaceutical shares, generally seen as defensive plays, were the top performers on the blue-chip FTSE 100, with GlaxoSmithKline, AstraZeneca and Shire all rising about 1 percent.
By 1046 GMT, the FTSE index was up 0.3 percent at 6,562.09 points, after falling 0.6 percent on Tuesday, on relief that the Chinese data was not as disappointing as recent figures which sparked fears that the world’s No. 2 economy was slowing down.
“In terms of where we are focusing our positions and our positive stance, within the emerging markets context we are trying to pick names which are more skewed towards China than the current account deficit economies,” Ian Richards, global head of equities strategy at Exane BNP Paribas, said.
Tesco, which is heavily weighted in the FTSE 100, rose 1.7 percent after posting in-line results and its chief executive Philip Clarke saying he would respond to both the discount groups and the upmarket grocers that have hit Tesco sales at both ends of the market.
“There are some glimmers of hope, with progress in the online offering worthy of note, the increasingly important convenience store offering gaining traction and the overall turnaround plan edging ahead,” Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said.
“Tesco remains the UK’s largest supermarket by some considerable margin, the actual profit number is significant and, from an investment perspective, the dividend yield of 5 percent is attractive.” (Additional reporting by Tricia Wright; Editing by Louise Ireland)