(Corrects 'Monday's record' to 'last Tuesday's record' in par
* FTSE 100 up 0.3 pct
* Mid-caps hit fresh record
* Homeserve surges to record high on results beat
* Results disappointment sends Topps Tiles down
By Helen Reid
LONDON, May 23 British shares hovered just shy
of their record level on Tuesday as banking stocks and EasyJet
drove modest gains, while strong earnings results among mid-cap
stocks drove the FTSE 250 to a fresh high.
The FTSE 100 index of Britain's largest companies
was up 0.1 percent by 0900 GMT, near last Tuesday's record level
of 7,533.70 points.
"I think there are reasons why the market can go higher from
here. It doesn't look expensive versus earnings growth, and it
doesn't look expensive in historical terms," said Callum Abbot,
UK equity fund manager at JP Morgan Asset Management.
"The market is trading at 15 times forward earnings, which
doesn't seem unreasonable given you are looking at earnings
growth in the mid-teens," he added, pointing also to the index's
yield being relatively higher than other developed equity
Blue-chip gains were underpinned by banks RBS and
Barclays, and defence contractor Babcock.
Babcock rose 3 percent after a positive note from Deutsche Bank
saying the stock could rebound if the defence contractor reports
solid results on Wednesday.
Among top gainers, EasyJet rose more than 2 percent
after a top-rated RBC analyst upgraded the stock, saying the
airline had reached its profit nadir, and pointing to an
expanding gap of strong customer rankings versus competitors.
The airline's shares recovered all the lost ground since a
badly-received earnings update last week sent the stock
Miners dragged on the index after shares in conglomerate
Noble Group sold off aggressively in Singapore, with the firm
forced to halt trading after a 32 percent plunge as ratings
agency S&P downgraded it on weak cash flows and profitability.
Glencore, BHP Billiton, Rio Tinto
and Randgold Resources fell 0.2 to 1.2 percent.
Merlin, which runs London attractions including
waxworks museum Madame Tussauds and the aquarium, was among the
biggest fallers at the open, down 1 percent after a deadly
attack in Manchester caused a kneejerk reaction against the
stock, which is exposed to domestic tourism.
The European travel and leisure sector was down 0.4
The more domestically-focused mid-cap stocks
outperformed large-caps again, hitting a fresh record high at
19,984.66 points and up 0.3 percent as company results
Home emergency insurance provider Homeserve surged
13 percent to a record high after its full-year results beat
"Homeserve has increased investment in its front line staff
and network," said Liberum analysts, adding that the firm's
acquisition of online trader listings website Checkatrade in
February could boost its access to an as yet untapped clientele.
Britain's biggest sandwich maker Greencore jumped
7.8 percent after its results came in ahead of expectations,
alleviating investors' concerns about inflation denting consumer
appetite, with what Jefferies analysts called 'reassuring
commentary' around inflation recovery.
Small-cap tile retailer Topps Tiles was less upbeat
about the economy, pointing to a challenging trading environment
and saying full-year profit would come in at the low end of
analysts' expectations. Its shares fell 5.6 percent, the top
(Editing by Louise Heavens)