FTSE at two-month peak as sterling falters

By Kit Rees and Julien Ponthus

LONDON (Reuters) - British shares edged higher on Friday and held to their highest level in two months as political uncertainties linked to Theresa's May's premiership pushed the pound lower, giving a boost to dollar-earning groups such as pharma stocks.

The FTSE 100 index (.FTSE) closed 0.2 percent up at 7,522.87 points, with Britain's pound on track for its worst week in a year as the Prime Minister hit back at a plot to topple her, saying she would provide "calm leadership" to the country.

"The talk of a leadership plot against the Prime Minister is eroding the pound's value and propping up the FTSE 100," CMC Markets analyst David Madden wrote in a note to clients.

Last month sterling strength helped the FTSE 100 to post a slight decline for September, but the currency has since been losing steam and the index has posted its biggest one-week gain since December last year.

Health stocks, which source a sizeable chunk of their revenue from the United States, were among the biggest gainers. Heavyweights GlaxoSmithKline (GSK.L) and AstraZeneca (AZN.L) rose by about 0.3 percent and 1 percent respectively.

British American Tobacco (BATS.L) was up 1.6 percent and Imperial Brands (IMB.L) advanced by 0.2 percent.

Shares in budget airline easyJet (EZJ.L) dropped by 1.6 percent, the biggest FTSE 100 faller, after a price target cut from broker Credit Suisse.

The airline also posted a mixed pre-close update, with analysts pointing to pricing pressures despite easyJet reporting a record summer and saying that it expects to reach the higher end of its profit range.

"Revenue trends are improving, but pricing remains under pressure," Liberum analysts said in a note.

Credit Suisse analysts saw some supportive factors, however.

"With Monarch's failure, Air Berlin's break-up, Alitalia's administration and Ryanair capacity cuts, we expect this confluence of positives must help EZJ (easyJet) pricing," they said in a note.

Shares in building materials company CRH (CRH.L) fell by 1.3 percent after its offer for U.S. Ash Grove Cement Co (ASHG.PK) was surpassed.

(Reporting by Kit Rees and Julien Ponthus; Editing by Keith Weir and David Goodman)