British shares climbed on Wednesday, helped by a buoyant consumer goods sector after Reckitt Benckiser sold its food business, while housebuilders added to gains. The FTSE 100 gained 0.6 percent, with household goods boosting the index, while miners were a weak spot.
Reckitt Benckiser shares led the gainers with a 1.4 percent rise to a three-week high after announcing the sale of its food business to US spice and herbs company McCormick & Co Inc for $4.2 billion. "By 2020, RB should be one of the fastest growing names in (the) global staples (sector), with superior returns and cash generation, in our view," Morgan Stanley analysts said.
The news helped personal and household goods feature among the best-performers, alongside British housebuilders. Barratt Development and Persimmon were up 2 to 2.3 percent after a positive note on the housebuilding sector, with Liberum analysts upping their target price on both.
"We see value in the sector as housebuilders can keep showing surprising resilience and valuation is attractive." TUI was among the top blue-chips and Thomas Cook Group led mid-caps after J.P Morgan increased its target prices, highlighting resilient outbound UK tourism trends and growing hotel occupancy in Turkey.
"We expect the upcoming results season to allow both TUI and Thomas Cook to reiterate their full-year guidance," analysts at the bank said. Meanwhile Royal Mail gave back some of Tuesday's gains, falling to the bottom of the blue-chip list. Software firm Micro Focus rose 1.9 percent as tech stocks across Europe had their best day in 10 months.
Earnings drove strong moves on the mid-cap index, with Qinetiq leading losers on the FTSE 250 after the defence and aerospace manufacturer said it had seen slower than expected orders in its EMEA services unit. Just Eat recovered from sharp early losses to end down 1.3 percent after the UK government said it would clamp down on extra credit card fees charged by retailers.
Domino's Pizza also fell 2 percent, while airlines EasyJet and British Airways owner IAG, which had been particularly targeted in the government announcement, also dropped. Spire fell 5 percent after Liberum downgraded the stock to 'hold', saying the valuation was not reflecting uncertainty around volatility in demand.
Galliford Try gained 4.6 percent after Liberum initiated coverage on the housebuilder with a 'buy', saying it now has better recovery prospects than Bovis. Packaging company RPC jumped up 4.5 percent to a four-month high after its first quarter revenue came in ahead of last year, helped by acquisitions and favourable currency moves. The firm also started its first share buyback programme, of up to 100 million pounds.
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