FTSE bounces back, AB Foods records best day in 16 years

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* FTSE 100 index closes higher

* AB Foods has best day in 16 years

* Banking, property stocks rebound

By Atul Prakash

LONDON, July 7 (Reuters) - Britain's top share index rebounded on Thursday, with Associated British Foods (LSE: ABF.L - news) recording its biggest one-day gain in 16 years after its brighter outlook on earnings. Gains by crude oil helped energy stocks.

Banking and property-related stocks, battered in the previous sessions on concern about economic growth following last month's vote in Britain to leave the European Union, rose as some investors looked for bargains.

Associated British Foods surged 9.5 percent, the biggest gain in the blue-chip FTSE 100 index, after the company upgraded its annual earnings outlook to a profit, reversing a previous forecast for a marginal decline.

"The rout in the British pound is the primary factor and has enabled the Associated British Foods to strengthen its position outside its home market," said Naeem Aslam, the chief market analyst at Think Markets.

"The weakness in the currency is the main denominator for the FTSE 100 index and investors will look very carefully at how lower currency has enabled firms to boost their profits."

The benchmark FTSE 100 index, dominated by internationally exposed companies, was up 1.1 percent after closing more than 1 percent lower in the previous session. Britain's domestically focused FTSE 250 index was up 1.5 percent.

Despite a sharp sell-off after the Brexit vote, the FTSE 100 is up about 3 percent since its close on June 23. However, it is down 10 percent in dollar terms as the slump in sterling to a 31-year low has reduced the dollar value of the market. In contrast, the FTSE 250 is down 8.5 percent in sterling terms.

Energy shares tracked crude oil prices higher. The UK oil and gas index was up 1 percent.

Property-related firms, under pressure all week on concern over the prospects for UK commercial property in the aftermath of Brexit, recovered some poise.

The FTSE 350 Real Estate (OTC BB: REACD - news) index rose 2.4 percent, helped by a 3.7 percent to 4.4 percent rise in shares of Land Securities (LSE: LAND.L - news) , Persimmon (Other OTC: PSMMF - news) and British Land (LSE: BLND.L - news) .

Stocks also got some support from the minutes for the June 14-15 meeting of the U.S (Other OTC: UBGXF - news) . Federal Reserve late on Wednesday. They showed the Fed's policymakers decided to leave interest rates unchanged until the consequences of Britain's EU referendum became clearer.

"An environment of 'lower for longer' interest tends to be good for equity markets," said Augustin Eden, an analyst at Accendo Markets. (Reporting by Atul Prakash; Editing by Larry King)