May 31, 2018 / 9:21 AM / a year ago

Britain's FTSE leads major European indexes in May

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* FTSE 100 up 0.2 pct, set to end May with biggest gain in Europe

* Mining stocks rise on China data

* CRH rallies after co says to merge European, Americas units

* Trouble for retailers: Card Factory falls after weak Q1 sales; M&S avoid FTSE relegation

By Kit Rees

LONDON, May 31 (Reuters) - Britain’s top share index is set to end May as the month’s best-performing major European index, shrugging off worries over a political crisis in Italy as commodities-related stocks rallied.

The UK blue chip FTSE 100 index was up 0.2 percent at 7,707.07 points by 0905 GMT, while mid caps rose 0.4 percent.

At the beginning of the week, the FTSE was caught up in a broader market sell-off on the back of concerns over a political crisis in Italy, which has had trouble forming a government since inconclusive elections in March.

The impact on the FTSE has been limited, with the index set to end May up 2.6 percent compared with a gain of just 0.2 percent for the broader European STOXX 600. The FTSE also reached a new record this month.

“A lot of it is due to the fact that (the FTSE) ... is detached from Europe in many ways. Essentially, it’s about the make-up of what the bulk of those large caps on the FTSE do,” Ken Odeluga, market analyst at City Index, said.

Odeluga pointed to the FTSE’s large weighting in energy stocks, which have benefited from a higher oil price, as well as miners.

On the day, materials stocks gave the biggest boost to the FTSE. Shares in miners Glencore, Anglo American and Rio Tinto rose 0.2 percent to 1.2 percent as metals prices were boosted by positive manufacturing data from China, the world’s top metals consumer.

Irish building materials group was the biggest riser, up nearly 5 percent after the firm said it would streamline certain European and American businesses by combining them to try to boost profit margins.

However, shares in Marks & Spencer and National Grid brought up the rear on the FTSE after the two stocks traded ex-dividend.

Retailer Marks & Spencer was also in focus after avoiding demotion from the FTSE 100 in a quarterly reshuffle of the index that saw online supermarket Ocado promoted to the UK’s index of biggest companies.

This demonstrates the growing dominance of disruptive firms with strong online positions over traditional high street retailers, which are struggling to keep up in a digital age.

The index rejig, which is based on a company’s market capitalisation, saw security company G4S and Mediclinic relegated instead.

Also among retailers, mid cap Card Factory saw its shares drop 3.5 percent after weak demand on the British high street hit its quarterly sales.

Shares in rail and bus operator FirstGroup were also under pressure, down 11 percent after the company replaced its chief executive following what its chairman called a disappointing year and said it was putting its Greyhound bus business in the United States under review. (Reporting by Kit Rees; Editing by Mark Potter)

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