Strong sterling weighs on FTSE 100

LONDON: Britain's top stock index missed out on a global rebound on  Tuesday, lagging European peers and Wall Street as Brexit optimism and data showing fast-rising wages lifted sterling, acting as an accounting drag for multinationals and exporters.

The FTSE 100 closed up 0.4 percent, well behind the euro zone's STOXXE which jumped 1.8 percent.

British American Tobacco was the biggest drag on the index, falling 4.6 percent after cutting its full-year revenue target for cigarette alternatives to 900 million pounds from 1 billion pounds.

BAT's statement again sparked uncertainties around a shift to heated tobacco products and e-cigarettes, with companies trying to maintain revenue growth as cigarette consumption falls.

Shares in supermarket Tesco fell 3.4 percent after Kantar Worldpanel data showed it had lost market share in the 12 weeks to Oct. 7 as consumers shopped at discount supermarkets Aldi and Lidl instead.

Online grocer Ocado shares topped the FTSE 100 with a 5.5 percent gain after BAML analysts double-upgraded the stock to "buy" from "underperform".

Analysts were sharply downgrading FTSE 100 earnings estimates as the results season began in earnest.

"The earnings season will be vitally important to UK indices given the nervous sentiment around the Brexit outcome and health of the broader European growth story," said Edward Park, investment director at Brooks Macdonald.

Mid-caps saw the biggest moves as earnings flowed in and the  FTSE 250 managed a 1.8 percent rise overall.

Merlin Entertainments shares fell 8 percent after it said Legoland's performance over the summer failed to meet its expectations, and warned of cost pressures from labour and regulation.

"The company is holding guidance but the shape changes with lackluster Legoland performance and increased cost inflation, partially offset by better than expected Resort Theme Park trading," wrote Liberum analysts.

JD Sports shares fell 5.5 percent, the second biggest decline on the FTSE 250, after Morgan Stanley started rating the stock with an "underweight" recommendation, saying JD's recent acquisition of U.S. sportswear retailer Finish Line "may be a step too far".