FTSE supported by positive company updates

By Kit Rees

LONDON (Reuters) - Britain's top share index ended slightly higher on Tuesday, driven by gains in lender Provident Financial (PFG.L) engineering firm GKN (GKN.L) and BT (BT.L), though housebuilders fell after a series of price target cuts.

The blue chip FTSE 100 index (.FTSE) closed 0.2 percent higher at 6,724.03 points. The index is up about 16 percent since a post-Brexit slump, but is up only 12 percent in dollar terms because of a sharp decline in the sterling.

The market was underpinned by a rise in basic resources stocks after recent sharp losses, with the UK mining index gaining about 2 percent.

The FTSE 100 index was also helped by several individual companies. Shares in Provident Financial surged 5.7 percent, the top gainer in the FTSE 100 index, after saying that its first half adjusted pre-tax profit jumped 17.6 percent.

Engineering firm GKN was also among the top risers, up 3.8 percent, after sticking to a forecast for 2016 to be another year of growth. It also said it would aim to cut costs by 30 million pounds to help boost next year's result.

"Staying on course and delivering on guidance (before FX) strikes us as pretty good going given the number of ebbs and flows across each division, although it is precisely what GKN has done for at least the last three years," Sandy Morris, equity analyst at Jefferies said in a note.

"We believe 2016 will not – as GKN guided - be a vintage year in terms of organic growth, but the things that need to happen to position GKN for good organic growth from 2017 appear to be slotting into place."

Telecoms company BT Group rose 3.1 percent after Ofcom did not recommend breaking up the company. Instead, the British regulator said that BT's network division Openreach should be run as a separate company within the telecoms group.

"Avoidance of the worst-case outcome may be a relief for investors and the underperformance of the BT share price in recent months may imply that concerns over governance at Openreach may be at least partially priced in," Polo Tang, Head of Telecom Research at UBS, said in a note.

Housebuilders, however, were the biggest laggards, with Taylor Wimpey (TW.L), Berkeley Group (BKGH.L), Barratt Developments (BDEV.L) and Persimmon (PSN.L) all down between 2.5 percent to 3.3 percent after Deutsche Bank cut its price target on all four stocks, citing Brexit uncertainty for a reduction in their forecasts for the sector.

Oil major BP (BP.L) was down 1.3 percent after missing its quarterly profit expectations due to weak refining margins and oil prices. The oil company also cut its 2016 investment budget to below $17 billion.

Outside of the blue chips, Virgin Money (VM.L) jumped over 8 percent after reporting a rise in half-year underlying pretax profit.

(Additional reporting by Atul Prakash; Editing by Raissa Kasolowsky)