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* FTSE 100 closes 0.6 pct higher
* Miners track stronger metals prices
* Sainsbury’s falls after results
By Kit Rees
LONDON, Sept 28 (Reuters) - Britain’s blue-chip share index bounced back from a one-week low on Wednesday as engineering firm Smiths Group surged after posting higher-than-expected profits and miners tracked stronger metals prices.
The FTSE 100 index closed 0.6 percent higher at 6,849.38 points, in line with a broader rally in European stock markets, after falling to a one-week low in the previous session. It is up nearly 10 percent so far this year.
Smiths Group rose more than 4 percent as improved sales at two of its units, as well as cost cuts, helped it to beat analysts’ full-year revenue and pre-tax profit forecasts.
“We continue to see an attractive investment thesis in Smiths based on reinvestment for growth,” Credit Suisse said. “We expect cash generation to remain healthy with lower pension contributions and management’s clear commitment to further working capital reductions.”
Mining companies were the top risers, with the sector index rising 1.4 percent. Rio Tinto, Anglo American and BHP Billiton rose between 0.8 percent and 2.7 percent as prices of major industrial metals advanced.
TUI advanced 1.3 percent after the holiday company lifted its core profit guidance for 2015/16, helped by strong demand from British tourists and a lower exposure than competitor Thomas Cook to Turkey, which has been hit by security fears.
“The TUI results are quite surprising in a way because we had the opposite story yesterday from Thomas Cook,” Jasper Lawler, analyst at CMC Markets, said.
“TUI, fundamentally, are a German company, so they just don’t have the pound effect weighing on them in quite the same way that maybe the UK travel firms do,” Lawler said.
The FTSE 100 fell in the previous two sessions on worries surrounding its banking sector. However, RBS’ $1.1 billion settlement to resolve claims in the United States that it sold mortgage-backed securities to credit unions did not weigh on its shares, which were up 1 percent.
“This payment had already largely been provided for and so should not have a material impact on our profit estimates or the group’s capital position,” Gary Greenwood, analyst at Shore Capital Markets, said in a note.
British grocer Sainsbury fell 3 percent, the worst performer in the FTSE 100 index, with its shares falling below its pre-Brexit vote levels after reporting another drop in quarterly underlying sales.
Shares in small-cap company UK Mail soared 43 percent after Deutsche Post DHL said it was buying the independent British postal operator for 243 million pounds ($315 million) to cement its foothold in Europe’s three largest e-commerce markets, Britain, Germany and France. (Additional reporting by Atul Prakash; Editing by Ruth Pitchford)