BT sends FTSE 100 higher on Openreach deal

Trader watching monitor Image copyright AFP

BT led the London market higher on Friday after confirming it would legally separate Openreach.

Shares in the telecoms giant jumped 4.1%, putting it at the top of the FTSE 100 risers.

The blue-chip index gained 28 points to close at 7,343.08.

George Salmon, equity analyst at Hargreaves Lansdown, said the agreement, announced earlier today, would be welcomed by BT investors.

"The news that it will remain part of the wider group ... should put to bed any lingering concerns investors may have had over this potentially disruptive issue," he said.

BT shares fell by a fifth in late January after cutting its outlook for both 2017 and 2018 forecast in the wake of an accounting scandal at its Italian business.

The stock has risen 14% since then.

'Italian fiasco'

Neil Wilson at ETX Capital said concerns remained about BT's ballooning pension deficit, which could hinder the group's ability to pay dividends.

He said: "We've yet to know what else lurks from the Italian scandal too. The Italian fiasco will eat up £500m in free cash in 2016/2017 and a further £500m in 2017/18.

"Although BT has largely completed its investigation, there is a risk that this could uncover more and the Financial Reporting Council could take this further."

The FTSE fallers were led by shopping centre owner Intu Properties, which shed 1.7%, while Hammerson lost 1.4% and British Land 1.3%.

On the FTSE 250, insurer Esure jumped 8% to a record high after reporting an 18% rise in annual pre-tax profit to £80.5m.

Challenger bank Aldermore was the biggest faller, down 7% after raising £113m through a share sale.

Segro, the property developer, dropped 6% after announcing a £556m rights issue to buy the stake in the Airport Property Partnership joint venture it did not already own.

Sterling was flat at $1.2157 as the dollar gained momentum ahead of an expected rise in US interest rates next week.

Against the euro it was down almost 1% at 1.13399 euros.