May 10, 2017 / 9:25 AM / 2 months ago

Earnings underpin FTSE, Barratt impresses but TalkTalk slumps

4 Min Read

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* FTSE 100 holds steady while earnings growth continues

* Investors more positive on consumer stocks

* Improved outlook, record forward sales lift Barratt

* TalkTalk slumps 12 pct after halving dividend

By Helen Reid

LONDON, May 10 (Reuters) - Britain's FTSE 100 on Wednesday hovered just shy of a one-month high, as strong earnings updates underpinned recent gains and Barratt outperformed peers.

The index was 1.4 percent below March's record 7,447.00 points.

"The main drivers have gone from top down to bottom up," said Ian Williams, economics and strategy analyst at Peel Hunt. "For the U.S., eurozone and the UK as well it's been much more to do with earnings, and it's so far so good on that front."

Earnings growth expectations had been improving not only on the blue-chips which benefited from a weaker sterling currency, but also on mid and small-caps, Williams said.

Britain's biggest builder, Barratt led the blue-chip gainers, up 4.1 percent after it said full-year profits would be at the top end of its guidance range, and forward sales were at a record level.

The housebuilder was among the worst hit after Britain voted to leave the European Union last June. But Wednesday's gains saw it hit an 18-month high, with its shares now up 95 percent from their post-Brexit vote lows.

"A few of the sectors that got absolutely clobbered after the Brexit vote have had an extra leg-up recently," said Williams.

Investors seemed more likely to buy consumer-exposed stocks now than in the first quarter, with an inflation-related hit to consumption seen to be mostly priced in, he added.

Retailers Next, ABF and Kingfisher were also top risers, up 1.5 to 2.5 percent.

Broadcaster ITV, meanwhile, fell 1.7 percent after saying advertising revenues could fall as much as 20 percent in June. It kept its guidance for full-year performance unchanged.

"The update confirms a weak trend for both net advertising revenue and studios in the first half - but no worse than anticipated, and already well flagged," said Panmure Gordon analyst Jonathan Helliwell, who has a 'hold' rating on the stock.

Mid-cap TalkTalk's shares spiralled down 10 percent after the broadband company cut its dividend and missed its forecast for full-year core earnings.

TalkTalk halved its final dividend to 5.0 pence from 10.58 pence a year ago, saying it would focus on returning the business to customer growth.

"A dividend cut was expected, but deeper than expected," said Jefferies analysts.

Vesuvius jumped to the top of the mid-caps, up 8.6 percent after the industrials group said better global steel production would boost its performance and trading had been good so far this year.

"As we have seen across the UK industrial landscape, Vesuvius has enjoyed a good start to the year," said Jefferies analysts.

Energy provider SSE recouped some of the previous session's losses, up 1.4 percent after being one of the worst-performing stocks on Tuesday when Prime Minister Theresa May announced a household energy price cap as part of her manifesto for reelection in June. (Reporting by Helen Reid; editing by Richard Lough)

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