July 24, 2013 / 10:36 AM / 5 years ago

UPDATE 1-Upbeat earnings push UK's FTSE towards 7-week highs

* FTSE 100 rises 0.6 pct
    * Kingfisher, EasyJet, ARM all up after results
    * Index faces resistance around 7-week highs

 (Updates prices, adds Kingfisher, fresh quotes)
    By Toni Vorobyova
    LONDON, July 24 (Reuters) - A wave of upbeat corporate
earnings pushed Britain's benchmark equity index back towards
seven-week highs on Wednesday, with signs of resilience among
British consumers as the economy recovers.
    Kingfisher added 1.8 percent after Europe's biggest
home improvements retailer reported a return to underlying sales
growth in Britain, while budget airline EasyJet 
 gained 7.8 percent on rising revenues.
    The pickup in the British economy, whose drivers include
central bank stimulus and government initiatives to bolster the
housing market, is expected to be confirmed by second-quarter
gross domestic product data (GDP) showing the pace of economic
expansion doubling to 0.6 percent.
    That has prompted banks such as Goldman Sachs and UBS to
recommend long bets on British equities and led investors to
take their most optimistic stance on the market in over a decade
according to the latest Bank of America Merrill Lynch survey.
    "We have turned the corner now in the UK and it's amazing
what a stimulus to the housing market can do for raising
confidence," said Edward Bland, head of research at Duncan
Lawrie Private Bank, which prefers British stocks to those in
the euro zone.
    "Earnings expansion is on the cards for maybe double digits
this year and next year," he added.
    The earnings rally helped lift the FTSE 100 39.67 points or
0.6 percent to 6,637.11 points, closing in on Tuesday's
seven-week highs and thus on the tough technical resistance area
around the 6,657 mark, where the rally has failed twice in the
past five sessions.
    Strong earnings numbers on Wednesday also came from
chipmaker ARM, which rallied 5.7 percent as markets had
been anticipating a weak release following weak numbers from
some of its technology sector rivals. 
    "These results suggest this traction is very solid judging
by the licence result, setting the business up for material
royalty growth ahead, and we retain our positive view on the
stock," analysts at Investec said in a note. 
    Traders also pointed to forecast-beating iPhone sales from
Apple overnight, which ARM supplies with chips, as
further lifting the tech sector. 

 (Editing by Hugh Lawson)
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