FTSE swings higher on UK GDP relief, corporate earnings

                                
 * FTSE up 0.1 pct
                                
 * UK GDP up 0.5 percent in the first quarter 2011
                                
 * Aggrekko, engineers rise after results
                                
 
                                
 By David Brett
                                
 LONDON, April 27 (Reuters) - Britain's FTSE 100 rose on
Wednesday, as the UK's fragile recovery in the first quarter
raised hopes of cheaper money for longer, fuelling demand for
equities.
                                
 Britain's gross domestic product expanded by 0.5 percent
between January and March, in line with forecasts, making it
unlikely the UK central bank will raise rates in the short term.
[ID:nLDE73Q0SJ]
                                
 Markets are not fully pricing in the first hike until
November. <BOEWATCH>
                                
 "It's definitely held back expectations of a rate rise,"
David Jones, chief market strategist at IG Index, said.
                                
 "Maybe there was a little bit of nervousness ahead of the
data that it wouldn't come in as expected and there has been a
bit of a relief rally after that."
                                
 By 1137 GMT, the blue-chip FTSE 100 <.FTSE> swung into
positive territory, up 5.47 points or 0.1 percent at 6,074.83,
having hit a 9-week closing high on Tuesday, albeit in light
volumes, after the four-day Easter weekend and ahead of another
four-day holiday weekend starting with the Royal Wedding on
Friday.
                                
 The FTSE is now testing resistance levels of around 6,070,
the level the index retraced from in early April, but IG's Jones
said the FTSE would need to break through the year's high at
around 6,105 before fresh momentum comes into the market.
                                
 UK corporate earnings dominated the top movers on Britain's
blue chip index. Aggreko <AGGK.L>, up 5.3 percent, hit a record
high after the temporary power supplier says it expected trading
profit to be slightly ahead of 2010. [ID:nLDE73Q0E5]
                                
 Engineers GKN <GKN.L>, Weir Group <WEIR.L> and IMI <IMI.L>
added up to 3 percent, with the sector boosted by results from
mid-cap peer Bodycote <BOY.L>, which jumped 12 percent.
                                
 "Momentum is clearly with Bodycote (which trades at an 18
percent discount to peers) and we believe that the shares
deserve at least a sector rating," Numis said in a note. It
raised its recommendation to "add" from "hold".
                                
 BP <BP.L> gained 1.5 percent, in a firmer energy sector
<.FTNMX0530>, after results and also after a report that its
spat with its partners in its Russian venture TNK-BP <TNBP.MM> 
could be nearing a resolution. [ID:nLDE73Q058] [ID: nLDE73Q0Y8]
                                
 
                                
 AB FOODS SQUEEZED
                                
 Associated British Foods <ABF.L> fell 6.1 percent as the
company warned of flat annual earnings as squeezed consumer
spending hit margins at its discount fashion retail chain
Primark. [ID:nLDE73P1O4]
                                
 Before this session, of the 17 FTSE 100 companies due to
report in the current quarterly earnings season, 18 percent have
already done so with 67 percent missing estimates, and with an
average negative surprise of 1.1 percent, according to Thomson
Reuters data.
                                
 Barclays <BARC.L> shed 4.8 percent, in a weaker banking
sector <.FTNMX8350>, as the British bank missed first quarter
earnings forecasts. [ID:nLDE73P1UB]
                                
 Banks remain hamstrung by Europe's sovereign crisis, with
Morgan Stanley saying in a note that whilst funding pressures
have abated somewhat as banks' recapitalisations have been
announced, sovereign news flow continues to overhang bank
funding costs.
                                
 Elsewhere, ARM Holdings <ARM.L> returned some its previous
session's gains, falling 1.5 percent despite the British chip
designer posting a better-than-expected 34 percent rise in first
quarter earnings, as investors booked profits. [ID:nLDE73Q09Z]
                                
 ARM was one five companies to trade ex-dividend, which
knocked 5.64 points off the FTSE 100 index. Centrica <CNA.L>,
Fresnillo <FRES.L>, Tesco <TSCO.L> and Smith & Nephew <SN.L>
also went ex-dividend.
                                
 Artificial hip and knees maker Smith & Nephew <SN.L> also
slid 3.1 percent after U.S. firm Johnson & Johnson <JNJ.N>
confirmed it is to buy Swiss medical devices maker Synthes Inc
<SYST.VX> for 19 billion Swiss francs.
                                
 The U.S. company was previously seen as a potential suitor
for Smith & Nephew. [ID:nL3E7FR0K9]
                                
 U.S. stock index futures pointed to a slightly higher open
on Wall Street on Wednesday, where later on the Federal Reserve
Chairman Ben Bernanke will face the press in the first regularly
scheduled news conference by a Fed chairman in the central
bank's 97-year history.
                                
 Traders are speculating whether the Fed's QE2 programme
could soon be wound up, reducing the supply of cheap money.
 (Editing by Jane Merriman)