Britain's FTSE slips from record high though broker upgrades help gainers

By Kit Rees

LONDON (Reuters) - Britain's top share index retreated on Friday, slipping from a record high reached in the previous session, though Worldpay Group and Lloyds benefited from bullish broker upgrades.

The blue chip FTSE 100 index was flat in percentage terms at 7,187.98 points by 0953 GMT, outperforming the broader European market. After ending 2016 on a record high, the FTSE 100 has rallied further to hit two fresh record highs since, its last at 7,211.96 points.

Shares in lender Lloyds rose 2 percent after broker Barclays raised its rating on the stock to "overweight" from "equal-weight" and increased its target price, citing an expected rise in net interest margin for the bank.

"We expect Lloyds to return over 10 bln pounds of capital to shareholders through to 2019, equivalent to almost a quarter of its current market cap or a little under 15p per share," analysts at Barclays said in a note.

Likewise an upgrade to "outperform" from "neutral" helped shares in payments processor Worldpay jump 2.6 percent to a two-month high, while Smiths Group rose 1.2 percent after Goldman Sachs began its coverage of the stock with a "buy" rating.

Goldman Sachs also started with a "buy" rating on mid cap valve-maker Rotork, sending its shares 3.5 percent higher.

Together with a 7.7 percent rise in TP ICAP, this helped underpin the UK mid cap index, which was flat in percentage terms.

TP ICAP, formerly called Tullett Prebon, rallied after a strong trading update which said it expected 2016 revenue to be 12 percent higher than the 796 million pounds ($986 million) reported in 2015, helped by a spike in trading volumes following the U.S. presidential election.

"The expectation of future interest rate rises in the wake of the U.S. presidential election has seen an increase in volatility and market activity," analyst Paul McGinnis at Shore Capital markets said in a note.

"This has benefited the company's traditional products areas such as interest rate derivatives, fixed income and Treasury products, all of which have been generally weak in the years since the credit crisis."

Precious metals miners Fresnillo, Randgold Resources and Polymetal International weighed on the blue chips, falling 1.3 percent to more than 2 percent as the price of gold slipped ahead of data that is expected to show U.S. non-farm payrolls increased last month.

(Editing by Catherine Evans)