FTSE supported near record high by Sky, ARM results

By Alistair Smout and Atul Prakash

LONDON (Reuters) - Britain's top share index advanced on Tuesday towards a recent record high, with shares in ARM Holdings and Sky rising sharply after the companies announced strong profits.

The blue-chip FTSE 100 was up 10.80 points, or 0.2 percent, at 7,062.93 points by the close, after gaining 0.8 percent in the previous session.

However, the index pared earlier gains after coming within 0.2 percent of a record high of 7,119.35 points, hit last week.

Shares in Sky rose 5 percent, the top gainer in the FTSE 100 index, as solid demand for pay TV in Britain and an improving picture in Germany and Italy helped it post a 20 percent jump in nine-month profit.

"Another set of encouraging numbers underlines Sky's determination to position itself as a major European force within the media sector," Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said.

ARM Holdings rose 3.9 percent after the British chip designer -- whose technology powers Apple's iPhones -- said it made an encouraging start to the year, with pre-tax profit up 24 percent.

The FTSE 100 index has risen nearly 8 percent this year, but lags other major European indexes including Germany's DAX and France's CAC, which are both up more than 20 percent.

These gains come despite substantial uncertainty over the outcome of Britain's May 7 election.

Prime Minister David Cameron's centre-right Conservatives and the centre-left Labour party are neck and neck in opinion polls, indicating that no single party will win a clear majority.

"Generally stock markets discount ahead of events. Because of the uncertainty, we haven't seen that in this case," said Frederique Carrier, director of RBC's Portfolio Advisory Group.

He added that there could be a correction in the British market around the vote. "It seems very unlikely that we will have on the 8th of May the answer for which government is going to lead us for the next parliament... This period of uncertainty is going to last quite a long time."

On the downside, Associated British Foods fell 5.3 percent, the top decliner in the FTSE 100 index, after reporting a 2 percent fall in first-half profit, warning that currency effects would hit performance in the current year.

Rio Tinto dropped 2.2 percent after missing first-quarter analyst forecasts for iron ore shipments due to bad weather and transport delays.

(Editing by Mark Heinrich)