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Britain's FTSE gains, on track for best week since July
December 9, 2016 / 11:18 AM / a year ago

Britain's FTSE gains, on track for best week since July

* FTSE 100 up 0.1 pct

* Index set for weekly rise of 3.1 pct

* Health care and consumer staples power gains

* Rally in bank stocks falters (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

By Peter Hobson

LONDON, Dec 9 (Reuters) - Britain’s top share index rose slightly on Friday, putting it on track for its best week since July, led by shares in health care and consumer staples companies, but a rally in bank stocks faltered.

The blue chip FTSE 100 index was up 0.1 percent at 1038 GMT, taking its gains for the week to more than 3 percent.

The week-long rally has been driven by financial stocks, which rose across Europe after the “No” result in Italy’s constitutional referendum inflicted less damage than thought, and after the European Central Bank extended its stimulus programme.

The UK banking index has gained 7.6 percent this week, on track for its best week since April and only slightly lagging the 9.1 percent surge in the wider European banking index.

But the rally appeared to be running out of steam, with shares in Barclays, Lloyds Banking Group and Prudential down between 1.7 and 2.6 percent.

A decision by Britain’s financial watchdog to delay its final verdict on setting a deadline for consumers to claim compensation for being mis-sold debt repayment insurance also put pressure on banks.

After large gains for banks in recent days, “it’s not surprising to see a bit of weakness creeping in,” said Chris Beauchamp, chief market analyst at traders IG.

Shares in “defensive” stocks with steadier incomes and dividends rose, keeping the index in positive territory.

Pharmaceutical companies GlaxoSmithKline, Shire and AstraZeneca were up by between 1.1 and 1.8 percent, while producers of consumer staples such as British American Tobacco, Imperial Brands and Unilever gained between 0.6 and 0.9 percent.

Rising gold prices boosted precious metals miners Fresnillo and Rangold Resources by 2.9 and 1.6 percent respectively.

Shares in outsourcing company Capita slumped early by as much as 11 percent taking its losses since issuing a profit warning on Thursday to more than 20 percent.

The warning was the second in three months by Capita, which blames Brexit-related client indecision for weaker orders. It said it would sell assets and trim costs to protect its balance sheet.

But Barclays bank said Capita was “selling the wrong bit” and a recovery wouldn’t come quickly.

“A near term re-rating is unlikely until growth stabilises and the strategic fog clears - but neither is likely for another 6-months in our view,” Barclays analysts said.

Capita’s shares later trimmed losses to just over 2 percent.

Rival outsourcer Mitie, which also issued a second profit warning in November, fell 2.6 percent.

A plan by Daily Mail and General Trust to cut its stake in Euromoney, publisher of the Euromoney magazine, to about 49 percent from about 67 percent to improve its investment portfolio and lower its debt hit both stocks.

Euromoney slipped 6.8 percent, while shares in Daily Mail and General Trust were down 1.3 percent.

Reporting by Peter Hobson Editing by Jeremy Gaunt

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