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Rolls-Royce weighs on FTSE 100 after five-day advance

Tue, 14th Feb 2017 17:20

* Rolls-Royce posts record reported loss

* TUI jumps on improved results

* Banks supported by hawkish Yellen comments (Adds closing prices, details)

By Kit Rees

LONDON, Feb 14 (Reuters) - Britain's top share index endedslightly lower on Tuesday, pausing after a five-day winningstreak as Rolls-Royce tumbled after reporting a recordloss.

The blue chip FTSE 100 index closed down 0.1 percentat 7,268.56 points, having hit its highest level sincemid-January in the previous session.

Shares in engineering firm Rolls-Royce dropped 4 percentafter the company announced a 4.6 billion pound ($5.8 billion)loss, hit by a fine to settle bribery charges and by losses onits currency hedges.

The stock was the most actively traded on the FTSE 100.Fellow defence firm BAE Systems also fell 1.7 percent.

Analysts cited concerns about Rolls-Royce's outlook asputting pressure on the shares.

"Some investors may also have a restive reaction to therather dry and narrow outlook comments, projecting only 'modestperformance improvements' and similar free cash-flow generationas in 2016," said Ken Odeluga, market analyst at City Index.

Improved earnings, however, buoyed shares in travel firm TUI, which jumped 5.3 percent.

TUI reported a narrower loss for the first quarter of 66.7million euros, a 17 percent improvement on last year, and saidit aimed to start offering holidays to customers from countriessuch as China, India, Spain and Italy.

Analysts cited the sale of its specialist holiday armTravelopia to KKR in a $407 million deal as a furtherboost to its shares.

"While we have reservations about the outlook for sourcemarkets, we are attracted to the increased diversification andthe steps TUI that has taken to drive growth elsewhere in thebusiness," analysts at Berenberg said in a note.

Banks rose, led by Royal Bank of Scotland and HSBC, as the sector was supported after Federal ReserveChair Janet Yellen struck a hawkish tone on the timing of aninterest rate hike. Higher rates are seen as helping banks boosttheir margins.

Among smaller companies, a solid set of results boostedshares in Acacia Mining, which rallied 8 percent andwas the biggest mid-cap gainer.

The gold miner said production in 2017 would rise 40percent, and said it would more than double its dividend. (Additional reporting by Danilo Masoni; Editing by MarkTrevelyan and David Holmes)

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Construction, pharma, gold miners seen as Europe's top Trump trades

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