UPDATE 3-FTSE 100 scales 8-week high as trade hopes trump slew of profit alerts

London's FTSE 100 share index surged to multi-week highs on Thursday, outpacing its European peers, as signals that the Sino-U.S. trade war could soon be resolved overpowered losses in blue-chip stocks drowned by profit warnings. The FTSE 100 closed 0.8% higher, earlier touching its highest level in nearly eight weeks, after China's commerce ministry said it was is in close communication with Washington over next month's trade talks, and President Donald Trump said overnight that a deal could be struck soon.

Gains were seen across all the sectors, led by heavyweight energy stocks and shared among financials and healthcare shares, which, along with sterling weakness, helped Britain's main index outperform the broader European benchmark. China's conciliatory statement also offset losses in tobacco firm Imperial Brands, education company Pearson, British Airways owner IAG and cruise operator Carnival, all of which warned on results.

"Keeping the FTSE buzzing was its commodity sector, obviously influenced by Trump's trade deal rumours, alongside the continued misery of sterling," Spreadex analyst Connor Campbell said. "The pound failed to make any in roads to regarding a recovery... paralysed by all the recent talk of a general election." Campbell added.

A weaker currency broadly helps bigger, internationally focused companies by inflating the value of their overseas revenues, but can weigh domestically focused small and medium sized firms. The mid-cap FTSE 250 inched higher after three consecutive sessions of losses but was only up 0.2%, with gains kept in check by the weaker pound as the Brexit malaise showed no signs of easing.

"A testy session for MPs (members of parliament) yesterday sets the tone for the run-in to the Brexit deadline. No-deal remains on the table," Markets.com analyst Neil Wilson said.

FLURRY OF PROFIT ALERTS

Imperial Brands, maker of blu e-cigarettes, cut its annual sales and profit view, saying the regulatory crackdown on vaping in the United States would hurt its results. Imperial's stock tumbled more than 12% to its lowest since January 2011 and registered its biggest one-day drop ever.

"...Hopes had been high that the vaping segment would drive growth as traditional tobacco declines. Increased regulatory scrutiny and retailers reluctant to stock vaping products is seriously undermining that hope," Hargreaves Lansdown analysts said. Pearson slid 14% to its lowest since late February 2018 after saying full-year profit would be at the bottom of its guided range, while IAG also fell 4% after blaming pilot strikes for an expected 215 million euros shortfall in annual profit.

London-listed shares of cruise-operator Carnival dropped 7% after slashing its annual profit forecast as it expects to take a hit from higher fuel prices. Among mid-caps, travel-food company SSP Group fell the most on the index as it slipped 9%, after saying it expected challenges in 2020 due to economic uncertainties and expectations of capacity cuts by airlines.

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