July 20, 2018 / 4:07 PM / in 10 months

UPDATE 1-Defensive shares keep Britain's FTSE aloft

* FTSE 100 ends little changed

* Defensives in demand

* Beazley drops after pretax profit falls (Adds closing prices)

By Kit Rees

LONDON, July 20 (Reuters) - The UK’s top share index held its ground on Friday, slightly outperforming a broadly negative European market, as global trade uncertainty and political troubles closer to home spurred demand for defensive stocks and earnings filtered through.

The blue chip FTSE 100 index ended down 0.07 percent at 7,678.79 points. It scored its second week of straight gains, up 0.2 percent this week.

The FTSE, dominated by companies with large foreign currency earnings, has found support from weakness in the pound, which has been on the backfoot this week amid signs of discord in Prime Minister Theresa May’s party over her Brexit strategy. Sterling rebounded on Friday from 10-month lows.

“The FTSE’s got the better set of exposures to the current set of conditions,” Ken Odeluga, market analyst at City Index, said.

“The FTSE is hugely exposed to a lot of cyclicals and risky factors like commodities ... but again, of course, it does have a huge set of consumer staples and non-cyclical businesses, which are the really large ones, and don’t forget the dollar exposure as well,” Odeluga added.

Tensions over global trade have been a prominent worry in markets over the summer and have kept the FTSE 100 trading in a narrow range since the end of May.

While concerns over tariffs have hit European sectors such as autos, the more defensive make-up of the FTSE has shielded it somewhat.

On the day, consumer staples stocks such as British American Tobacco, Imperial Brands and Unilever were among the biggest gainers, all up between 0.4 percent and 2.5 percent.

“In view of the uncertainty caused by both existing and possible new trade tariffs, we currently prefer a balanced position between defensive and growth stocks,” analysts at Credit Suisse Wealth Management said in a note.

“We therefore favor Swiss, UK and emerging market equities.”

Earnings were also in focus, especially among smaller companies. Shares in insurer Beazley fell 1.5 percent after the company reported a steep fall in pretax profit as rising U.S. interest rates took their toll on investment returns.

Unilever also benefited from a number of target price upgrades from brokers, including Barclays, Jefferies and Berenberg after the consumer giant’s earnings topped earnings estimates in the previous session.

“The market appears to have taken relief from the better- than-expected H1 margin outturn, which has added renewed credibility to the savings-driven bottom-line growth story at Unilever,” analysts at Barclays said in a note. (Reporting by Kit Rees and Danilo Masoni)

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