February 28, 2017 / 6:01 PM / 7 months ago

Britain's FTSE edges up as Babcock, GKN gain

* FTSE 100 ends up 0.1 pct

* Defence companies lead; miners weigh

* Babcock, GKN, Meggitt top gainers after updates

* Go-Ahead slumps on GTR rail concerns (Adds details, closing prices)

By Helen Reid

LONDON, Feb 28 (Reuters) - Britain’s main share index edged up on Tuesday, despite being held back by mining stocks and wealth manager St James Place.

The FTSE ended 0.1 percent higher, as gains by GKN and Pearson outweighed losses from basic resources stocks.

Engineering group GKN rose 4.9 percent after it reported a 12 percent rise in profit for 2016, and sales up 22 percent, ahead of forecasts.

Education services giant Pearson was a top gainer, up 2.2 percent. The company posted results on Friday, promising to further cut costs.

“We see this as a false hope,” said Liberum analysts, who rate the stock a ‘sell’. “The shares are not factoring in the structural risks from what seems like a similar story to what happened in other challenged sectors such as newspapers.”

Babcock Intl, the engineering support and outsourcing company whose biggest client is Britain’s Ministry of Defence, was the top FTSE gainer, up 7.1 percent, after saying it remained on track to achieve its full-year targets, and had a 30.8 billion pound pipeline.

Wealth manager St James Place fell 3 percent after it posted higher costs weighing on cash earnings, and said Chief Executive David Bellamy would step down at the end of the year, to be replaced by current Chief Financial Officer Andrew Croft.

“We view the internal hand over as being the best possible result for SJP,” said Panmure Gordon analyst Barrie Cornes in a note.

Miners were top fallers, tracking the pan-European basic resources index lower. Fresnillo ended flat, outperforming the sector after it reported a six-fold increase in profit for 2016 on higher commodities prices and a weak Mexican peso.

“The move to a net cash position prompted a larger than expected final dividend of USc21.5/share,” said UBS analysts. “In our view FRES operational performance is improving and we like its low cost core assets and industry leading growth profile.”

Retailers Marks & Spencer and Next rose 1.8 and 0.5 percent respectively. Jefferies analysts upgraded M&S from ‘underperform’ to ‘buy’, saying it has closed the gap with Next for quality of website content.

Defence equipment company Meggitt, a peer of GKN, rose 13.1 percent after it posted a 13 percent rise in profit for 2016.

Shares in Burberry rose as much as 5 percent to a 1-1/2 year high in a late-day volume spike after activist investor GBL disclosed a 3 percent stake in the luxury goods company.

Berenberg analysts said the news was a positive for Burberry shares, noting the sharp rally in Adidas after GBL disclosed a 3 percent stake in the German sportswear maker in 2015.

Transport operator Go-Ahead Group was the top faller on the mid-cap index, down 13.8 percent, its worst day in 8 1/2 months, after the company cut its full-year expectations due to its GTR rail franchise, which had been beset by strikes.

“We expect consensus estimates to come under pressure, and the uncertainty surrounding GTR is likely to also weigh on the shares,” said Liberum analysts. (Reporting by Helen Reid; additional reporting by Danilo Masoni and Vikram Subhedar; Editing by Mark Trevelyan)

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