UK shares end higher on earnings optimism; AstraZeneca gains

Shivani Kumaresan and Amal S
·2-min read
FILE PHOTO: The London Stock Exchange offices in the City of London, Britain

By Shivani Kumaresan and Amal S

(Reuters) - London's FTSE 100 rose on Tuesday following a clutch of upbeat company earnings, while AstraZeneca rose after the European medicine watchdog said it saw little reason to change its stance on the drugmaker's COVID-19 vaccine.

The blue-chip FTSE 100 index ended 0.8% higher at its best close since early January, with financials, healthcare and consumer staples stocks among the best performers.

AstraZeneca was the top boost to the index after the European Medicines Agency (EMA) head, Emer Cooke, said she saw no reason to change its recommendation of the vaccine. The EMA is still investigating concerns over the shot's safety and will release its findings on Thursday.

"The market is starting to appreciate that higher yields are not necessarily a bad thing for stocks, as long as they reflect higher growth and inflation expectations," said Andrea Cicione, head of strategy at TS Lombard.

"Over the last few sessions, investors are gaining a bit more confidence and are getting comfortable with growth again."

A recent rise in treasury yields had hampered an otherwise strong start to the year for UK stocks, as investors feared a bigger-than-expected spike in inflation as economies began to reopen.

Meanwhile, brokerage UBS in a note said it remained bullish on UK equities and raised its FTSE 100 year-end target from 7,200 to 7,600, a 17.6% premium to its 2020 close.

The energy sector was the top laggard for the day, as lower oil prices resulted in losses in oil heavyweights BP Plc and Royal Dutch Shell Plc. [O/R]

The domestically focused FTSE 250 index rose 1.1% to a near 13-month high, almost completely recovering its losses from the coronavirus crisis.

Specialist pension provider Just Group Plc rose 5.2% after it reported an 11% rise in annual earnings and flagged progress in shoring up its capital base.

Student housing provider Unite gained 2.2%, after it forecast a return to full occupancy and rental growth for the upcoming academic year and reinstated dividend for the pandemic-hit 2020.

(Reporting by Shivani Kumaresan and Amal S in Bengaluru; Editing by Arun Koyyur and Lisa Shumaker)