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* Banks boost bluechips
* Dr. Martens drops to record low following weak results
* Mitie Group rises on strong profit outlook
* FTSE 100 up 1.1%, FTSE 250 down 0.1%
(Updates to market close)
By Shashank Nayar and Ambar Warrick
Jan 27 (Reuters) - London's FTSE 100 rose on Thursday
following strong results from spirits maker Diageo and
as bank stocks benefited from rising yields, while boots maker
Dr. Martens dropped to a record low and pulled down
British mid-caps.
The blue-chip FTSE 100 index was up 1.1%. Banks were
among the top boosts to the index, tracking stronger yields
after the U.S. Federal Reserve signalled a March interest rate
hike while investors priced in another increase by the Bank of
England next week.
Diageo, which makes popular brands including Johnnie
Walker whisky, Tanqueray gin and Guinness stout was among the
top boosts to the FTSE, rising 2.5% after it posted a large jump
in half-year sales.
A weaker pound also helped dollar-earning companies
like British American Tobacco and Imperial Brands
.
"The UK markets are well insulated right now due to no tech
stock exposure, a sector which drops when interest rates rise,
and while broader market sentiment is diminishing, UK will
continue to outperform," said Craig Erlam, a senior market
analyst at Oanda.
The FTSE 100 has steadily outperformed its peers in the
developed world due to a higher weightage of banking shares,
which tend to gain in a high-interest rate environment, and as
elevated commodity prices supported energy and mining stocks.
"But this risk aversion that we see in global markets is not
going to last long as we see traders desperate to buy in at
current levels," Erlam said.
The domestically focussed mid-cap index fell 0.1%,
with boots maker Dr. Martens down 9.0% to a record low
after its revenue growth slowed in the third
quarter.
Meanwhile, security and cleaning services provider Mitie
Group rose 7.2% after it raised its annual profit
outlook for the second time in four months.
(Reporting by Shashank Nayar in Bengaluru; Editing by Shailesh
Kuber, Subhranshu Sahu and Jonathan Oatis)
