FTSE 100 fights off losses as sterling loses shine; weak earnings weigh

By Ankika Biswas and Shashwat Chauhan

(Reuters) -UK's FTSE 100 reversed early losses on Thursday as a weak pound boosted the export-heavy index, while declines in stocks trading ex-dividend and weak earnings from the likes of Haleon and Beazley kept gains in check.

The blue-chip FTSE 100 closed 0.4% higher, rising for the second session.

Sterling fell against the dollar on expectations of a more hawkish Federal Reserve following hotter-than-expected U.S. labour market data and Bank of England Governor Andrew Bailey on Wednesday indicating a possible end to its rate hiking cycle.

BoE Chief Economist Huw Pill said on Thursday the British economy is showing slightly more momentum than expected and pay growth is proving a bit faster than anticipated amid easing threats of a deep recession.

"A weaker pound is helping the FTSE in a way, but market is just recovering some momentum after Tuesday's drop" said Daniela Hathorn, senior market analyst at Capital.com.

"We're struggling to find direction."

Export-heavy consumer staples stocks such as Diageo and Unilever also gained momentum.

The FTSE 100 has had a strong start to the year, clocking its best February performance since 2019, on upbeat corporate results and a recovery in commodity prices on hopes of improving Chinese demand.

Among individual stocks, HSBC fell 3.3%, taking the broader banking index down 2.3% as it traded without entitlement for dividend payout.

Others trading ex-dividend, including The Berkeley Group Holdings and Hargreaves Lansdown, were also down around 2% each.

Insurer Beazley Plc slid to the bottom of FTSE 100 with 5.1% losses after lower net profit in 2022, followed by a 4% fall in consumer healthcare group Haleon Plc after weak annual earnings and 2023 outlook.

"Companies are suffering the effects of higher input costs in general, but nothing that the market wasn't expecting," Hathorn added.

London-listed shares of building materials giant CRH jumped 8.0% to top the FTSE 100 on plans to buy back shares worth $3 billion, marking a more than three-fold increase on the year.

The construction and materials sector gained 6.5%, hitting a fresh record high.

(Reporting by Shashwat Chauhan and Ankika Biswas in Bengaluru; Editing by Sherry Jacob-Phillips, Janane Venkatraman and Andrew Heavens)