Strong earnings pull British shares higher; Aviva climbs

Among other stocks, Paragon Banking Group jumped 6.8% after the lender posted a record first-half underlying profit and set out a 40 million pound ($56.60 million) buyback plan. Aviva gained 3% after activist investor Cevian Capital took a 4.95% stake in the British insurer.

British shares inched higher on Tuesday, helped by positive earnings updates from companies including Intermediate Capital Group and British American Tobacco, while Aviva gained after an activist investor built up a stake. The blue-chip FTSE 100 index rose 0.2%. Intermediate Capital Group climbed 6.9% to a record high after the alternative asset manager posted a 19% jump in its annual third-party assets under management.

British American Tobacco gained 2.3% after it raised its annual revenue growth forecast to more than 5% at constant currency as the cigarette maker's focus on newer products like e-cigarettes and tobacco-heating devices pays off. The domestically focused mid-cap FTSE 250 index advanced 0.1%.

Asian stocks pared early gains, with traders staying on the sidelines ahead of U.S. inflation data and a European monetary policy meeting this week for gauging market trajectory. "Investors' main concern appears to be over short-term inflation risk and whether rising prices are likely to be transitory in nature," said Michael Hewson, chief market analyst at CMC Markets UK.

Adding to investors' concerns, a report said Britain's proposed June 21 lifting of lockdowns could be delayed by a fortnight as COVID-19 cases continue to mount. "The all-important question will be how this translates into hospitalizations and deaths now that 53% of the adult population are fully vaccinated," Deutsche Bank strategist Jim Reid wrote in a note.

After breaking above the 7,000 marks in mid-April, the FTSE 100 has traded in a tight range as concerns over accelerating inflation overshadowed optimism about a gradual reopening of the economy. Among other stocks, Paragon Banking Group jumped 6.8% after the lender posted a record first-half underlying profit and set out a 40 million pound ($56.60 million) buyback plan.

Aviva gained 3% after activist investor Cevian Capital took a 4.95% stake in the British insurer.

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