April 23, 2018 / 4:14 PM / 3 months ago

UPDATE 1-Britain's FTSE climbs to 7-week high as financials rise

* FTSE 100 up 0.4 pct at close

* Rising bond yields help banks, hurt “bond proxies”

* Capita and Rotork lead mid caps (Recasts, adds quote and detail and updates prices at close)

By Julien Ponthus and Kit Rees

LONDON, April 23 (Reuters) - The UK’s top share index rose on Monday as a rise in bond yields buoyed financials and an appetite for risk returned at the beginning of a busy week of company updates.

The FTSE 100 ended the session up 0.4 percent at 7,398.87 points, its highest level in seven weeks, pulling into positive territory following a muted start to the day’s trading.

A rise in bond yields helped boost shares in financial stocks, as U.S. Treasury yields headed towards the psychologically significant 3-percent mark.

Shares in HSBC, Lloyds and Barclays were all up by between 0.4 percent and 1.1 percent.

“Banking stocks have managed to record a fairly decent day helped by rising bond yields across the board,” said Michael Hewson, chief market analyst at CMC Markets UK.

Shares in big, “bond proxy” stocks took a knock from the rise in yields, which make their dividends streams less attractive for investors.

Consumer good makers Reckitt Benckiser was among the worst performers, down 2 percent as JP Morgan cut its rating for the stock, which had published disappointing results last week.

Other consumer staples stocks such as Diageo, down 0.6 percent, and Unilever, off 0.2 percent, also lost some ground.

More broadly, fading worries over global trade and geopolitics helped buoy market sentiment.

Shares in BP and Royal Dutch Shell gained 0.7 percent and 0.9 percent respectively, shaking off a decline in the price of oil which remained close to its highest levels since the end of 2014.

Among other notable movers, shares in WPP fell 2.5 percent after Ford Motor Company said it would take bids on some of its advertising managed by the British group, adding to uncertainty after last week’s exit of founder Martin Sorrell.

There were stronger price swings among smaller companies, with shares in shipping services Clarkson plunging around 18 percent after a profit warning due to lower freight rates in the tanker market.

“Lower freight rates doesn’t tally with optimism over the health of the global economy, though overcapacity in the industry has also been a key factor”, commented CMC Markets analysts Michael Hewson.

British IT-led outsourcer Capita jumped more than 13 percent after it announced a three-for-two rights issue and a strategic plan to return it to growth.

Industrial group Rotork surged around 11 percent after a strong rise in first-quarter revenues. (Reporting by Julien Ponthus and Kit Rees; editing by Andrew Roche)

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