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Britain's FTSE recovers from one-week low as miners, TUI rally

Wed, 28th Sep 2016 09:10

(ADVISORY- Follow European and UK stock markets in real time onthe Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

* FTSE 100 up 0.9 pct

* Miners track metals prices higher

* TUI up after profit guidance hike

* Sainsbury's falls after results

By Kit Rees

LONDON, Sept 28 (Reuters) - UK shares rose on Wednesday,recovering from a one-week low as shares in commodities-relatedstocks rallied and tour operator TUI gained afterraising its profit forecast.

The blue chip FTSE 100 index was up 0.9 percent at6,867.90 points by 0908 GMT, in line with a broader rally inEuropean stock markets.

Mining companies were the top risers, with RioTinto, Anglo American and BHP Billiton all gaining between 2.5 to 3.1 percent, with analysts citing arise in the price of nickel following the suspension of mines inthe Philippines as giving the sector a boost.

Oil prices strengthened after industry data showed asurprise draw in U.S. crude stocks, helping shares in UK oilmajors BP and Royal Dutch Shell.

TUI also saw strong gains, up 2.4 percent and close to an8-month high after the holiday company lifted its core profitguidance for 2015/16, helped by strong demand from Britishtourists and a lower exposure than competitor Thomas Cook to Turkey, which has been hit by security fears.

"The TUI results are quite surprising in a way because wehad the opposite story yesterday from Thomas Cook," JasperLawler, analyst at CMC Markets, said.

"TUI, fundamentally, are a German company, so they justdon't have the pound effect weighing on them in quite the sameway that maybe the UK travel firms do," CMC Markets' Lawlersaid, adding that the drop in pound had made it more expensivefor British tourists.

The FTSE 100 fell in the previous two sessions on the backof worries surrounding its banking sector. RBS' $1.1billion settlement to resolve claims in the U.S. that it soldmortgage-backed securities to credit unions did not weigh on itsshares, which were up 1.4 percent.

"This payment had already largely been provided for and soshould not have a material impact on our profit estimates or thegroup's capital position," Gary Greenwood, analyst at ShoreCapital Markets, said in a note.

British grocer Sainsbury was the top faller on theblue chip index, with a 3 percent fall in its share pricepushing it back below its pre-Brexit vote levels after reportinganother drop in quarterly underlying sales.

Royal Mail dropped 1.8 percent, after rival UK Mail soared over 43 percent after a deal with Deutsche Post. (Reporting by Kit Rees)

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