By Julien Ponthus
LONDON (Reuters) - UK shares missed out on a rising tide across European bourses on Wednesday as sterling rallied to a two-month high after reports that Britain and the European Union had agreed the outlines of a Brexit divorce bill.
The FTSE (FTSE) was down 0.5 percent, while the pan-European STOXX 600 .STOXX benchmark climbed 0.6 percent to its highest level in almost three weeks.
Sterling's slump in the immediate aftermath of the June 2016 Brexit vote to leave the European Union gave British dollar-earners groups an accounting-related boost but an opposite swing in the currency hurts them in a similar way.
It "weighs on the UK blue-chip index by reducing the value of internationally denominated profits and dividend income," Accendo Markets said to its to clients.
British cinema operator Cineworld Group (L:CINE) posted the most spectacular fall, dropping 14 percent after it announced it was in talks to acquire U.S. peer Regal Entertainment (N:RGC) for approximately $3.6 billion in cash.
Shares in the London Stock Exchange (L:LSE) also fell after its chief executive, Xavier Rolet, left over a clash with a top shareholder.
In the energy sector, Africa-focused Tullow Oil (L:TLW) added 0.7 percent after it refinanced $2.5 billion of loans borrowed against its oil and gas reserves.
The rest of the sector was deep in negative territory as oil prices fell on doubts whether OPEC and Russia would agree on extending a crude production cut to cover all of 2018, and a report of an unexpected rise in U.S. crude oil inventories.
Royal Dutch Shell (L:RDSa) and BP (L:BP) both lost about 1.5 percent.
Financials were one the few sectors to trade in positive territory with Barclays (L:BARC), Lloyds (L:LLOY) and RBS (L:RBS) rising between 2 and 3 percent.
Also among midcaps, ZPG (L:ZPG), the owner of British property websites Zoopla and PrimeLocation, lost 3.8 percent after it reported a smaller-than-expected full-year pretax profit as it spent more on acquisitions and advertising.
Among top gainers outside the blue chips was British soft drinks firm Britvic (L:BVIC), up 6.3 percent after its full-year adjusted core earnings rose 5 percent.
In the small caps segment, mail-order gift and educational products supplier Findel (L:FDL) jumped 21 percent after it reported first-half earnings.