Earnings in focus as FTSE finds support in weaker pound

MILAN: Earnings updates were the main focus for investors in British shares on Thursday as the country's top FTSE 100 index inches higher, although remaining within recent tight ranges on caution over the outcome of Brexit talks.

The FTSE rose 0.3 percent by 0856 GMT, reversing earlier slight losses after a retail sales growth in June rose less than expected, depressing the pound and supporting shares in export oriented companies. The more domestically focused mid cap index FTSE 250 fell 0.5 percent.

Shares in companies that benefit from currency weakness due to their overseas exposure rose with British American Tobacco  and Compass Group both at session highs, up 1.2 percent and 0.7 percent respectively.

Unilever lagged other internationally exposed stocks after the consumer goods maker reported lower-than-expected second quarter sales, hurt by a Brazilian transport strike and weak pricing, although profits beat expectations on higher margins.

"Unilever missed its first half sales growth target due to strikes in Brazil but overall the picture remains positive," said Neil Wilson, chief market analyst at Markets.com.

"Overall there was more good progress on margins... No reason to think the group cannot achieve its target of 20 percent by 2020. But the focus now is on the move out of London, which shareholders will vote on in October," he added.

Its shares fell as much as 1.2 percent but recovered, also helped by the fall in the pound.

Among the top fallers was SSE, down 2.9 percent after Britain's second-largest energy supplier lost more customers in the first quarter, while advertising giant WPP  fell 3 percent after a disappointing update from its French peer Publicis.

Engineer Babcock fell 9.6 percent after it cut its revenues growth outlook on delays in government spending, while price comparison website Moneysupermarket rose 7.8 percent following solid results and signs its growth strategy is working.

On Thursday mining stocks, recently hit by concerns that a trade war could slow global growth, hurting demand, were broadly lower as metal prices fell

The FTSE 100 index has been moving broadly sideways over the past few weeks as Prime Minister Theresa May struggles to keep her cabinet united ahead of a March 2019 deadline to leave the European Union.

Increased uncertainty over Brexit following high profile government defections earlier this month have also cast a doubt over expectations the Bank of England will raise interest rates at next month's policy meeting.