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* FTSE 100 up 0.1 pct
* Upgrades boost Smith & Nephew, Next
* Forex curbs Diageo sales growth
* Pound still a pain
By Kit Rees
LONDON, Jan 25 (Reuters) - The UK’s top share index crept higher on Thursday as analysts pondered company updates while a stronger pound kept the FTSE’s progress in check.
The blue chip FTSE 100 index was up 0.1 percent at 7,653.78 points by 0921 GMT.
A resurgent pound has put pressure on the FTSE 100, which slid to a 3-week low in the previous session. Sterling was up slightly on the day, having hit its highest level since Britain’s June 2016 Brexit referendum on Wednesday.
The blue chip index’s heavy weighting in large, dollar-earning companies gave it a boost following sterling’s plunge after the Brexit vote.
“A good marker is if we hold above 1.40 in cable, then that could be the line in the sand between more durable strength and something that’s going to be consistently an issue for the big multinationals listed in the UK who have lots of foreign earnings,” Jasper Lawler, head of research at London Capital Group, said, referring to the sterling/dollar exchange rate.
Shares in heavyweight consumer staple Diageo rose 1.1 percent on the back of its half-year figures, which showed that half-year sales increased by 1.7 percent.
While Diageo’s sales growth was hampered by foreign exchange rates, analysts at Raymond James said they expected this to be partially offset by a lower tax rate. Diageo earns around 77 percent of its revenues outside of Europe, according to Thomson Reuters data for 2017.
Changes in broker ratings on stocks were the main driver behind individual moves on the FTSE, as analysts mulled over recent company updates.
Shares in medical technology firm Smith & Nephew were the biggest gainers, up nearly 4 percent after JPMorgan raised its view on the stock to “overweight” from “neutral”.
JPMorgan analysts said a pull-back in the firm’s shares offered a compelling entry point, highlighting forex and tax rates as two important tailwinds for Smith & Nephew.
Shares in retailer Next also advanced, up 1.9 percent after RBC raised its rating on the stock to “outperform” from “sector perform”, citing improved sales outlook and recent sterling strength versus the dollar.
However, shares in software firm Sage Group declined a further 1.4 percent following Wednesday’s disappointing figures for revenue growth in the first quarter.
Earnings were front and centre of the action among British mid caps, which declined 0.3 percent.
Kier Group jumped 12.8 percent following an upbeat trading statement, while UK lender Close Brothers rose 4.3 percent after saying that it expected to see a rise in first-half profit.
Meanwhile Renishaw dropped 10.6 percent after giving a half-year update.
Reporting by Kit Rees; Editing by Janet Lawrence