Strong results from leading software company Micro Focus and a rally among mining stocks drove Britain's FTSE 100 higher on Wednesday, while Crest Nicholson and mid-cap pub companies suffered sharp losses. The FTSE 100 was up 0.2 percent at at 7,734.20 points by the close, flirting with the record high reached in mid-January.
Micro Focus was top of the heap, jumping 6.2 percent to a two-month high after the software company won a new $40 million licensing deal earlier than expected, saying it would bolster first-half revenue.
The share price reached levels last seen in mid-March when a profit warning dented the stock.
"We see this as positive for sentiment, but only helping to reduce the extent to which H2 had to improve versus H1 to meet full-year guidance, rather than placing any upward pressure on numbers," Investec analysts said.
Mining stocks Anglo American, Glencore and Rio Tinto also pushed the index higher.
Burberry shares rose 3.6 percent after the luxury group beat market forecasts as it took the first steps to reinvigorate the brand.
Overall the UK earnings season has driven sharp share price reactions, with a negative skew.
"Those companies that are disappointing relative to expectations are being treated pretty harshly by the market, and conversely those with very low expectations and particularly a big short position are being relatively rewarded for at least meeting expectations," said Guy Ellison, head of UK equities at Investec.
Several mid-cap stocks registered sharp falls after results.
Homebuilder Crest Nicholson sank 12.8 percent to the bottom of the FTSE 250 after saying rising construction costs were hurting the pricing of its homes, forcing it to cut its full-year operating margin forecast.
Rising costs were also cited by pub firm Mitchells & Butlers as a reason for its profit dip, sending its shares down 7.2 percent.
Peer Marston's also fell, sliding by 12.2 percent after reporting half-year results.
"Anything consumer-facing that's having to pay UK wages and UK rates is facing cost inflation," said Investec's Ellison.
Meanwhile, M&A news continued to drive shares.
Paddy Power Betfair rose 6.3 percent after the bookmaker said it was in discussions to combine its US business and fantasy sports company Fanduel to target the US after a Supreme Court ruling on Monday paved the way for states to legalise sports gambling.
Overall earnings from UK companies have been encouraging this quarter, while macroeconomic data has been poor.
"It seems the first quarter for UK companies was better than for the UK economy," said Caroline Simmons, deputy head of the UK chief investment office at UBS Wealth Management.
"We expect a modest upside over the next six months, but we don't expect it to outperform other markets." Analysts are downgrading earnings expectations for the UK, however, as the results season draws to a close.
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