RBS surge supports FTSE ahead of U.S. jobs data

By Alistair Smout

LONDON (Reuters) – Sharp rises for Royal Bank of Scotland (RBS.L) and InterContinental Hotels (IHG.L) were the highlights of early trade on the FTSE 100 (.FTSE), which held steady ahead of closely watched U.S. jobs data.

Part-nationalised RBS surged more than 10 percent to the top of the FTSE 100 (.FTSE) leaderboard after trebling its profit in the first quarter, benefiting from improved cost control and a reduction in losses from bad loans.

Jefferies said that earnings were more than twice consensus estimates, with impairments 48 percent below forecasts.

Also rising after strong results was InterContinental Hotels Group, which proposed a special dividend along with its strongest room revenue performance in seven quarters. Its shares jumped 8.6 percent.

“InterContinental has delivered a stellar performance. Growth in revenue per available room is ahead of expectation … while the return of hotel sale proceeds in the form of a special dividend is ahead of schedule,” Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said.

RBS and IHG combined to bring the FTSE 100 slightly into positive territory, up 4.28 points, or 0.1 percent, at 6,813.15. lifting the index to a fresh two-month high.

Of companies that have reported quarterly earnings so far, 82 percent of FTSE 100 companies have beaten or met expectations, compared to 57 percent of STOXX Europe 600 (.STOXX) companies.

However, only 18 percent have met or beaten forecasts for revenues on the FTSE 100, Thomson Reuters StarMine data showed.

“(The StarMine) figures tell you everything you need to know. There’s been greater weakness in the top line in general, and the bottom line has been artificially boosted by things like share buybacks,” said Jeremy Batstone-Carr, analyst at Charles Stanley.

Stocks without earnings newsflow saw only limited moves, ahead of closely watched U.S. non-farm payrolls data out at 1:30 pm (1230 GMT).

U.S. hiring likely increased at its quickest pace in five months in April, although Societe Generale predicted that the number would beat the Reuters consensus 210,000 figure by 10,000 jobs added, anticipating a “solid” report.

(Editing by Susan Fenton)