* FTSE up 0.2 pct
* BP rises after surge in first-quarter profits
* Drop in sterling helps FTSE rise
* UK manufacturing activity fell to 17-month low in April
* Major European bourses closed for Labour Day (Updates prices, adds details)
By Julien Ponthus and Helen Reid
LONDON, May 1 (Reuters) - British shares rose on Tuesday as data showed manufacturing growth slowed to a 17-month low, sending the pound lower and boosting dollar-earning companies.
The data was the latest in a run of weak economic indicators, making it less likely the Bank of England would raise interest rates when it met next week.
Markets now indicate around a 16 percent chance of a rate increase this month, down from 90 percent in early April .
The FTSE 100 ended the first day of May up 0.2 percent to 7,520.36 points. Oil major BP added the most points, rising 1.3 percent after reporting profit jumped 71 percent in the first quarter.
Food delivery group Just Eat rose the most, gaining 4.1 percent after reporting first-quarter revenues. Liberum analysts said the trading update showed Just Eat’s annual sales would probably be higher than expected.
Cigarette maker British American Tobacco suffered the biggest loss on the FTSE, down 2.4 percent after broker Piper Jaffray downgraded the stock to “neutral” from “overweight”.
Healthcare stocks were the strongest sector, led by Astrazeneca with a 2.2 percent rise. Shire and GSK also gained after shares in U.S. pharmaceutical giant Merck declined even though first-quarter earnings beat forecasts .
British insurer Aviva rose 1.4 percent after announcing a 600 million-pound ($825 million) share buyback, as part of a 2 billion-pound capital deployment plan.
Overall, analysts noted the drop in the pound had less impact on the FTSE 100, suggesting the negative relationship between the two has weakened. When inflation and interest rates are rising, the negative correlation has historically tended to ease or even reverse.
In Copenhagen, the other European market open for trading on May Day, Danish brewer Carlsberg rose 0.4 percent after reporting a 5 percent fall in sales in the first quarter, hurt by currency moves and lower volumes in its key Russian market.
The latest consequence of U.S. sanctions on Russia was felt when the London Stock Exchange said it would suspend trading in global depositary receipts of Russian aluminium and power producer En+ on May 2 at 1615 GMT. U.S. sanctions had named both the company and its owner, Oleg Deripaska .
Among smaller stocks, Johnston Press jumped 9.2 percent following CEO Ashley Highfield’s resignation, after more than six years at the publisher of The Scotsman and The Yorkshire Post newspapers.
Spread-betting company Plus500 jumped 5.8 percent as it reported a five-fold gain in its first-quarter core earnings on Tuesday, helped by customers seeking to cash in on the crypto-currency boom.
Challenger bank Virgin Money rose 6.5 percent after it published strong credit performance and better-than-expected deposit growth figures.
Julien Ponthus, editing by Larry King