Vodafone shares help FTSE 100 index rise 0.2 per cent in line with European equity markets
The UK's top share index rose on Tuesday helped by a rally in Vodafone shares after the mobile operator announced further cost cuts and plans to lift cash flow.
The FTSE 100 index rose 0.2 per cent by 1018 GMT, moving in line with other European equity markets which found support in hopes of progress in the U.S.-China trade dispute.
The broader pan-European STOXX 600 was up 0.3 per cent.
Vodafone shares rose 6.8 per cent to the top of the FTSE 100 after its new CEO Nick Read said he would reduce operating costs by 1.2 billion euros by 2021 and review its tower assets to drive higher returns.
The group showed it was operating generally in line with analysts forecasts and said it would freeze the dividend until it reduced its debt pile, easing worries over a possible cut. "The reason why the share price is up today is upgraded guidance for free cash flow... Essentially it is the pot of money that is used to pay back debt and pay the dividend," said Helal Miah, an analyst at The Share Centre.
"Having a bigger pot of money raises hopes that the dividend isn't going to be cut," he said.
Gains in banks also helped drive the FTSE 100 higher with shares in HSBC and Lloyds trading up 0.7 and 0.6 per cent respectively, while a fall in oil stocks on falling crude prices weighed.
Elsewhere the focus was still on earning updates.
Credit data company Experian said it expected full-year organic revenue to come in at the top end of its previous forecast, driven mainly by strength in its North American business. That sent its shares up 4.5 per cent.
Turnaround specialist Melrose rose more than 4 per cent after the said trading was in line with 2018 expectations.
Among mid-caps, BTG gained 8.8 per cent after the healthcare service provider announced better-than-expected revenues and a positive outlook, while FirstGroup also rose 8.8 per cent after the transport group appointed a new finance chief and posted first-half results boosted by strong demand for bus travel across the United States and Britain.
Some updates, however, disappointed. Housebuilder Taylor Wimpey fell 2.1 per cent after a mixed trading statement.
"Trading through the second half has been strong with sales rates around 8 per cent ahead of the prior year. However, operating from a lower number of sites combined with a more cautious outlook for next year sees us trim our full-year 2019 volume expectations," said Peel Hunt analysts in a note.
Mid-cap discounter B&M tumbled 7.6 per cent as underlying sales growth at the main B&M stores slowed in the second quarter. (Reporting by Danilo Masoni Editing by Peter Graff)
(With inputs from agencies.)