By Danilo Masoni
MILAN (Reuters) - Gains among mining stocks on the back of stronger metal prices and a surge in packager Smurfit Kappa propped up British shares on Wednesday, helping them outperform a sluggish European equity market.
The commodity-heavy FTSE 100 index rose 0.3 percent and mid caps advanced 0.4 percent by 0831 GMT, while the broader pan-European STOXX 600 index up 0.1 percent.
Smurfit Kappa, Europe's biggest packager, was the biggest gainer on the FTSE as investors warmed to its prospects after U.S. rival International Paper dropped plans to make an offer for the Irish-based group.
"The fundamentals of the European packaging sector are in excellent shape," Davy analyst Barry Dixon said in a note, as he upgraded his earnings forecasts and price target for the stock.
"Smurfit is the leading player in this market and therefore the most exposed to the positive dynamics. This, combined with the deep intrinsic value of its assets, points to significant hidden value and upside in the share," he added.
Miners provided the biggest uplift to the FTSE as a sector after base metal prices rose, with copper and lead gaining ground on fears of a supply squeeze. [nL3N1T81VL]
Anglo American (LON:AAL), Rio Tinto (LON:RIO) and Antofagasta (LON:ANTO) all rose more than 2 percent, while BHP Billiton (LON:BLT) gained 1.6 percent on reports the Anglo-Australian miner received first bids for U.S. shale business. [nL2N1T320L]
Consumer staples however were a weak spot with British American Tobacco (LON:BATS) and Unilever (LON:ULVR) down 1.1 and 0.6 percent respectively.
British Land fell 1.2 percent after Credit Suisse (SIX:CSGN) downgraded Britain's second-largest listed property developer to underperform in a note on UK REITs where the Swiss bank also downgraded Hammerson and upgraded Shaftesbury.
Hammerson fell 0.5 percent and Shaftesbury rose 0.8 percent.
RPC tumbled 13 percent after the plastic packager posted an in-line jump in full-year adjusted operating profit but said it had identified for sale non-core assets to sharpen its focus on higher-value plastics. [nL5N1T80V5]
"News that the company was looking to sell non-core assets totalling £209 million in revenue to focus on reusable or recyclable plastics left the stock nowhere near as green as its environmental aims," said Spreadex analyst Connor Campbell.
WH Smith (LON:SMWH) was a standout gainer, up 6.4 percent, following a well-received update.
"High Street total sales and LFL ... is a great performance in the context of a very challenging environment and will surprise" said Investec analysts.