September 18, 2017 / 8:55 AM / 3 months ago

Britain's FTSE picks itself up from 4-month low

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* FTSE 100 up 0.4 pct

* Financials, energy stocks lead rally

* Pressure from sterling eases slightly

* BAE Systems boosted by Qatar order

By Kit Rees

LONDON, Sept 18 (Reuters) - The UK’s top share index advanced on Monday, rebounding from the previous session’s four-month low as shares in financials rose and higher oil prices boosted energy shares.

The blue chip FTSE 100 index was up 0.4 percent at 7,243.76 points by 0843 GMT, joining in with a broader rally in risky assets across European bourses.

Financials, which tend to be more volatile than other sectors, added the most to gains, with shares in HSBC, Lloyds and Barclays gaining 0.3 percent to 1.1 percent.

Other cyclical sectors, such as energy, also rose, with heavyweights BP and Royal Dutch Shell up 0.9 percent and 0.5 percent respectively as underlying oil prices hit $50 per barrel.

Last week a surge in sterling had dampened the FTSE 100, which dropped to its lowest level since the end of April as its predominantly international, dollar-earning firms were hit by the currency’s rally.

On Monday, the pound eased back slightly ahead of a speech by Bank of England governor Mark Carney, having hit its highest level since the Brexit vote.

“The prospect of a softer Brexit and rising expectations of an interest rate hike could lead to a further appreciation of the GBP against the EUR. Conversely, a stronger GBP is weighing on UK equities,” analysts at Credit Suisse Wealth Management said in a note.

“We remain negative on UK equities given their high overseas exposure.”

Defence firm BAE Systems was among the biggest individual risers, gaining 2.7 percent after Qatar signed a deal to buy 24 modern Typhoon aircraft from the company.

“We believe the market was not expecting a Qatar order for Eurofighter – considering its previous orders for Rafales and F-15 military jets,” analysts at UBS said in a note.

“Furthermore we believe the market could now allocate a higher probability for further orders from new/existing customers going forward,” UBS analysts added.

Engineering firm was another top gainer, jumping around 3 percent following an upgrade from Exane BNP Paribas to “neutral” from “underperform”, with the broker citing benefits from possible future disposals.

Shares in defensive firms including tobacco firms Imperial Brands and British American Tobacco and precious metals miner Randgold Resources brought up the rear on the FTSE.

Outside of the blue chips, a jump in esure’s shares helped the mid cap index gain 0.3 percent.

Shares in esure soared 6.5 percent following a media report that the insurer’s biggest shareholder Peter Wood was looking to sell his 30.8 percent stake.

Reporting by Kit Rees; Editing by Catherine Evans

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