Stocks flat as earnings counter UK growth

LONDON (Reuters) - The FTSE 100 was fractionally higher on Thursday as gains by banks on strong UK GDP figures were countered by some mixed corporate earnings.

Banks added 0.8 percent on news that Britain pulled out of recession in the third quarter, with its strongest quarterly economic growth in five years, boosting expectations that lending conditions will improve.

Many commentators, however, still remained cautious about the outlook for the British economy, with the third-quarter figure for gross domestic product probably flattered by the Olympics in London in August.

"Despite the fact the GDP figure released today was better than expected and does suggest a glimpse of hope for the UK economy, it must be put into perspective. This is only a single figure, and does not signal the start of sustained recovery," Jeremy Whitley, Manager of Dunedin Income Growth Investment Trust said.

At the close, the FTSE 100 index was up 0.27 points, or 0.01 percent at 5,805.05 points, having added 0.1 percent on Tuesday to snap a three-session losing streak.

While the economy returned to growth, the third-quarter corporate earnings season maintained a mixed picture.

WPP shed 2.3 percent after the world's largest advertising group cut its full-year outlook for the second time in two months in a third-quarter trading update.

Trading volume in WPP was more than double its 90-day daily average, at 254 percent, while volume for the FTSE 100 index was 90 percent of its average.

Consumer products giant Unilever, however, added 2.9 percent after beating market expectations with a 5.9 percent rise in underlying sales in the third quarter.

And cruises operator Carnival was the top blue chip gainer, up 3.0 percent, as its peer Royal Caribbean Cruises posted lower quarterly earnings but raised its full-year forecast, saying bookings have been stronger than expected and it has been able to charge more per cruise.

Royal Caribbean was up over 3 percent on Wall Street.

Other well-received results helped lift New York stocks early on, but by London's close the gains had faded with U.S. blue chips down 0.1 percent. Tech giants Apple and Amazon both report after the New York close.

"The UK stock market's fortunes depend more on the health of the world economy than the domestic scene. Here, there are some hopeful signs from U.S. housing, the Chinese cycle bottoming, lower oil prices and reduced fears of a European financial collapse," Andrew Bell, Chief Executive of Witan Investment Trust said.

(Reporting by Jon Hopkins; Editing by Ruth Pitchford)

Source: http://news.yahoo.com/britains-ftse-edges-higher-miners-advance-071508246--finance.html

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