Unilever, Lloyds help FTSE edge higher

LONDON (Reuters) - Britain's top share index edged up on Wednesday as Lloyds LLOY.L reported its highest annual profit in a decade and Unilever ULVR.L promised a far-reaching review.

FILE PHOTO: A man walks through the lobby of the London Stock Exchange in London, Britain, August 25, 2015. REUTERS/Suzanne Plunkett/File Photo

The blue-chip FTSE 100 index .FTSE ended up 0.4 percent, after closing 0.3 percent lower on Tuesday. The index climbed to a one-month high earlier this week.

The UK banking index .FTNMX8350 climbed 1.8 percent after Lloyds signalled it was finally recovering from the financial crisis and reported 2016 pretax profit of 4.2 billion pounds, more than double that in 2015. Lloyds shares were up 3.6 percent.

“The recovery seems to be nearing completion as the bank has boosted pretax profit, supported by a positive set of metrics, with notable improvements in earnings per share and net interest margin,” said Richard Hunter, head of research at Wilson King Investment Management.

“Meanwhile, the capital cushion remains strong, the cost-income ratio is leading edge and the special dividend is representative of confidence in the outlook.”

Unilever here rose 5.7 percent, the biggest gainer on the FTSE, after the Anglo-Dutch consumer goods group said it was reviewing its options to drive shareholder value, days after knocking down a $143 billion bid from Kraft-Heinz.

A source close to the group said the review should be completed by April and could lead to asset sales and cost cuts.

Barratt BDEV.L shares rose 2 percent after UK's biggest housebuilder announced a 9 percent rise in pretax profit in the six months through December. However, it said it would build around 20 percent fewer homes in London in 2016/17.

Gains in the broader market were capped by weaker miners, which tracked a drop in major industrial metals such as copper CMCU3, aluminium CMAL3 and nickel CMNI3.

The UK mining index .FTNMX1770 dropped 1.4 percent, dragged down by falls in shares of Anglo American AAL.L, BHP Billiton BLT.L and Rio Tinto RIO.L.

The UK mid-cap index .FTMC also fell, by 0.5 percent, pressured by steep declines in shares of outsourcing group Serco SRP.L and drugmaker Indivior INDV.L.

Serco, which provides transport, health, justice, defence and security services in public departments, slumped 19 percent after posting a 14 percent drop in 2016 trading profit and said it was vulnerable to increased global political uncertainty in 2017.

“We continue to anticipate another reduction in revenues, profitability and earnings, with another step up in net debt,” Shore Capital analyst Robin Speakman said.

Indivior shares fell 6.6 percent, after the company reported a sharp fall in its operating profit.

The market showed little reaction to data revealing that Britain’s economy accelerated at the end of 2016 but growth for the whole year was weaker than previously thought. There were also signs of weakness ahead, suggesting the Brexit vote will start to take its toll in 2017.

Reporting by Atul Prakash; additional reporting by Danilo Masoni; Editing by Susan Fenton and Susan Thomas