British mid-caps jump over signs of economic growth; Babcock surges
By Devik Jain and Shashank Nayar
(Reuters) -British mid-caps ended higher on Tuesday and hovered near record levels as data showed the country's economy grew in February and Babcock International surged on its proposed restructuring plans.
Shares of the British engineer surged 32% to the top of FTSE 250 index after the company unveiled a plan that included divesting certain businesses. JP Morgan upgraded the stock to "overweight".
The domestically focussed mid-cap index ended 0.5% higher as Britain's economy grew by smaller-than-expected 0.4% in February from January.
"Major factors that were affecting UK markets seems to have taken the backfoot now and investors seem to be pretty bullish especially on British midcaps on the valuations and medium term growth perspective," said James Gutman, chief of investment portfolios, Dolfin Financial.
The blue-chip index was subdued, with Just Eat Takeaway being the top gainer as its orders jumped by 79% in the first quarter, but weakness in financial and energy stocks weighed on the index.
The FTSE 100 has risen 6.5% so far this year as huge vaccine rollouts and government stimulus helped boost optimism about a faster economic rebound. But a recent surge in COVID-19 cases globally and elevated yield levels have kept gains limited.
"After strong gains over the last 12 months, in anticipation of economic recovery, the FTSE 100 has lost ground over recent days, perhaps starting a phase of consolidation," said Paul Jackson, global head of asset allocation research at Invesco.
Among other stocks, Deliveroo Holdings gained 5.7% after the food delivery group and supermarket Sainsbury's expanded a grocery delivery trial to around 100 stores across Britain under a new two-year contract.
Sportswear retailer JD Sports rose 3% after it forecast higher profit in 2022 and reported a rise in annual profit as some stores reopened this week and online sales continued to surge.
(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V and Shinjini Ganguli)
