Britain's FTSE rises, boosted by weak sterling, housebuilders

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* FTSE 100 up 0.5 percent

* Services company DCC (Frankfurt: DCC.F - news) top of blue-chip index

* Housebuilders bounce back as government report expected

* BP flounders after profit slumps

By Helen Reid

LONDON, Feb 7 (Reuters) - British shares rose on Tuesday, boosted by a weak sterling and housebuilders stocks, while services company DCC surged on news of a purchase from ExxonMobil.

Sterling fell to its lowest in two weeks against the dollar, contributing to gains for Britain's blue-chip FTSE index which has many dollar-earning constituents. The FTSE was up 0.6 percent at 0955 GMT.

DCC rose to the top of the FTSE after the company said it would buy a retail petrol station network of ExxonMobil's Norwegian unit, Esso Norge AS, for 2.43 billion Norwegian crowns ($293.38 million).

Shares (Berlin: DI6.BE - news) in the Ireland (Other OTC: IRLD - news) -based company were up 6.7 percent and headed for their biggest one-day gain since Nov. 2015.

Oil major BP suffered after the company reported 2016 profit slumped to the lowest level in at least a decade, to $2.59 billion. BP shares were down 2.8 percent, the worst-performing FTSE stock. The FTSE 350 oil & gas index was the only sector index in negative territory.

Engine maker Rolls Royce (LSE: RR.L - news) was a top gainer, up 2.8 percent. The stock figured in Citi bank's 'top calls' for the day. "Results next week should mark the inflection from fire-fighting to looking to the future," Citi analysts wrote in a note.

Materials stocks were the top sectoral gainer. Rio Tinto (Hanover: CRA1.HA - news) , which reports earnings on Feb. 8, was a top gainer along with peers Fresnillo (Frankfurt: A0MVZE - news) and Randgold Resources . The FTSE miners benefit from a weaker pound due to their operations abroad.

Education group Pearson (Xetra: 858266 - news) , which suffered its worst-ever daily fall on Jan. 18, was a top gainer, up 2.8 percent after Morgan Stanley (Xetra: 885836 - news) raised its target price on the stock to 615p from 550p.

Housebuilders Taylor Wimpey, Barratt Development and Persimmon (Frankfurt: 882058 - news) were gaining ground, up between 2.2 and 3.4 percent, after closing in negative territory yesterday.

The government was expected to publish details of a new housing strategy on Tuesday.

The mid-cap FTSE 250 index outperformed the blue-chip index, up 0.8 percent with workwear and hygiene company Berendsen (LSE: BRSN.L - news) leading the gains, up 5.4 percent after RBC analysts upgraded the stock to "outperform" from "sector perform", saying the European business was in good shape.

The small-cap index was up 0.2 percent, underperforming its peers as energy stocks weighed.

Premier Oil (LSE: PMO.L - news) was the top faller, down 5.9 percent after a downgrade from "buy" to "hold" from Deutsche Bank (IOB: 0H7D.IL - news) analysts, citing underperformance from the company's Solan field in the North Sea. (Reporting by Helen Reid; Editing by Raissa Kasolowsky)