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Reckitt leads FTSE up on food business sale

WT24 Desk

The FTSE 100 edged up on Wednesday, helped by a buoyant consumer goods sector after Reckitt Benckiser sold its food business to a U.S. company, while disappointing earnings reports sent mid-caps lower, Reuters reports.

The FTSE 100 .FTSE gained 0.1 percent, with household goods and food sectors boosting the index while miners weighed. Reckitt Benckiser led gainers after saying it would sell its food business to U.S. spice and herbs company McCormick & Co Inc for $4.2 billion.

Reckitt’s shares (RB.L) were up 1.4 percent at a three-week high on the deal. “By 2020, RB should be one of the fastest growing names in (the) global staples (sector), with superior returns and cash generation, in our view,” said Morgan Stanley analysts.

Royal Mail (RMG.L) gave back some of yesterday’s strong gains, falling to the bottom of the blue-chip list, down 2.4 percent. EasyJet (EZJ.L) and British Airways owner IAG (ICAG.L) were among top blue-chip losers, down 1.7 to 2.2 percent.

While there were few notable releases from blue-chip companies, earnings drove strong moves on the mid-cap index. Qinetiq (QQ.L) led mid-caps lower, down 8 percent after the defence and aerospace manufacturer said it had seen slower than expected orders in its EMEA services unit.

Just Eat (JE.L) shares fell 6.6 percent, among top European losers and on course for their worst day in six months. A trader linked the move to a finance ministry crackdown on extra card fees charged by companies from takeaway food apps to airlines.

Motoring group AA (AAAA.L) led mid-caps, hitting a two-month high after Barclays initiated coverage with an overweight rating. Analysts at the bank said they expected cash flow generation to pick up.

“The AA has been given a digital makeover…,” they said. “From early 2018 AA should be able to integrate its vast array of different business for the first time in its 112-year history.”

Packaging company RPC (RPC.L) was also among top mid-cap gainers, up 3.9 percent at a four-month high after its first quarter revenue came in ahead of last year, helped by acquisitions and favourable currency movements.

The firm also started its first share buyback programme, of up to 100 million pounds.

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