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* FTSE 100 up 0.5 pct
* South Africa exposed stocks dip
* Financials, energy drive gains
* Sophos hits all-time high
* Small-cap Nanoco drops 19 pct
By Helen Reid
LONDON, April 4 British shares outperformed
European peers on Tuesday, boosted by strength in energy and
industrials, while South Africa exposed companies were under
pressure after S&P downgraded the country's credit rating to
Britain's FTSE 100 was up 0.4 percent by 0845GMT,
outperforming the more hesitant Europe-wide STOXX 600.
The index was little changed after PMI data showed British
construction growth slowed in March.
Gold miners Randgold Resources and Fresnillo
were among top gainers, up 1.5 to 1.8 percent.
Distributor and outsourcer Bunzl was a top gainer,
up 2 percent after it said it bought two safety workwear
businesses: ML Kishigo in the U.S. and Neri in Italy.
"Two further bolt-on deals should enhance EPS by c.1% and
evidence that conversion of the M&A pipeline is not slowing,"
said Jefferies analysts in a note.
South Africa exposed stocks tracked the rand lower, after it
dropped sharply after credit ratings agency S&P downgraded the
country to sub-investment grade, and Moody's said its rating was
under review for a downgrade.
South African bank and asset manager Investec was
down 2.1 percent. It has dropped 13 percent since the day before
finance minister Pravin Gordhan was sacked.
Insurer Old Mutual was the worst-performing
blue-chip stock, down 2.2 percent, while South Africa exposed
healthcare provider Mediclinic was down 2.3 percent.
"It's not a huge surprise South Africa has lost its
investment-grade credit rating, so markets will likely have an
initial reprice in terms of corporate exposure, but it would
require further economic changes to drive a more prolonged
sell-off," said Ed Park, investment director at Brooks
GKN, which makes engines and components for cars,
was down 2 percent, tracking Europe-wide losses in the auto
sector, the worst-performing on the day, down 1.6
Supermarket Sainsbury was down 1.4 percent, after
Kantar Worldpanel data showed sales at the major British
retailer dipped slightly in the first quarter while they
increased at discount competitors Aldi and Lidl.
Among mid-caps, meanwhile, valve maker Rotork was up
4.7 percent and set for its best day in four months.
JP Morgan upgraded the firm, which is exposed to a recovery
in oil and gas markets, to 'overweight', saying its earnings
power had increased.
"The group remains well positioned to benefit from the
recovery, and growth opportunities exist outside of just oil &
gas capex," the bank said.
Sophos hit an all-time high, up 11.5 percent after
the IT security firm reported billings ahead of consensus.
Nanoco Group was the top small-cap faller, down 19
percent and through more than five days of average daily volume
after the maker of quantum dots - semiconductor nanocrystals
used in displays - said sales did not materialise in the second
half, and cut its full year expectations.
(Reporting by Helen Reid; Editing by Andrew Bolton)