FTSE index slips from highs on Ukraine tension

* FTSE 100 index falls 0.2 percent

* Fresh tensions in Ukraine hurt sentiment

* William Hill (Other OTC: WIMHF – news) , Pearson (NYSE: PSO – news) rally after updates

By Atul Prakash

LONDON, April 25 (Reuters) – Britain’s top share index slipped from a seven-week peak on Friday after growing tensions in Ukraine eclipsed encouraging updates from betting agency William Hill and media group Pearson.

The two companies were the top gainers on the FTSE 100 index , with Pearson rising 3.8 percent after saying it had made a “solid” start to the year and William Hill up 2.6 percent after its first-quarter results.

But the blue-chip FTSE 100 index was down 0.2 percent at 6,691.07 points by 1017 GMT after climbing to its highest since early March on Thursday, following an escalation in tensions in Ukraine and the prospect of more sanctions against Russia.

Ukrainian forces killed up to five pro-Moscow separatists in the east of Ukraine on Thursday, prompting Russian Foreign Minister Sergei Lavrov to say on Friday that Kiev’s interim government would face justice for a “bloody crime”.

“Fresh tensions in Ukraine have darkened investors’ mood and there are concerns about further sanctions against Russia. People are also worried about a possible military conflict between Russia and Ukraine, which is not priced in at all,” said Keith Bowman, equity analyst at Hargreaves Lansdown (LSE: HL.L – news) .

U.S. President Barack Obama is expected to speak to European leaders on Friday to try to nudge the European Union towards further sanctions against Russia. U.S. Secretary of State John Kerry said on Thursday that time was running out for Moscow to change its course in Ukraine.

“CAUTIOUS”

While UK blue chips only generate 0.3 percent of their sales in eastern Europe, Thomson Reuters Datastream shows, the prospect of more sanctions and strained ties between Russia and Western powers dented appetite for shares across Europe.

“People are going to be quite cautious going into the weekend. We certainly are, especially with the Ukraine events unfolding quite quickly,” said Mark Ward, head of execution trading at Sanlam Securities.

“People are generally closing positions here.”

Cyclical stocks were the worst hit, with HSBC falling 1.5 percent and Lloyds down 1.2 percent. The UK banking index dropped 1 percent, the biggest sectoral decliner on the FTSE 100 index.

However, losses suffered by the broader market were capped by a rise in shares of individual companies.

Investors reacted positively to updates from William Hill and Pearson, while Berenberg’s move to raise its price target for luxury goods company Burberry to 1,550 pence from 1,500 pence helped its shares to gain more than 1 percent.

Analysts at Citi said Pearson’s underlying revenue growth of 1 percent beat its forecast of a 3-5 percent drop, while some other analysts highlighted William Hill’s encouraging numbers in overseas and online markets despite weak results at its soccer business and regulatory headwinds in Britain.

“We retain our ‘buy’ recommendation given the strong position of William Hill in the online gambling space, with potential to see further significant revenue growth, whilst the valuation remains undemanding,” analysts at Panmure Gordon said in a note. (Additional reporting by Francesco Canepa; Editing by Gareth Jones)

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