By Alistair Smout and Kit Rees
LONDON (Reuters) - British stocks climbed on Tuesday, rebounding from a fall the previous day as a rise for easyJet and mining companies helped outweigh a sharp drop in Burberry's (L:BRBY) shares.
The blue chip FTSE 100 index (FTSE) was up 0.8 percent at 7,000.06 points by the close, underperforming a rally in other European indexes as sterling rose.
Among the biggest gainers was easyJet (L:EZJ), up 5.1 percent. The stock has fallen about 40 percent since Britain voted to leave the European Union, and it issued a profit warning earlier this month.
Investors said that there was value in easyJet (L:EZJ) after Ryanair (I:RYA) followed suit on Tuesday in cutting its profit forecasts. Ryanair is down around 10 percent since the Brexit referendum.
Ryanair opened slightly lower, but ended over 4 percent up after the airline's chief executive said he expected the airline's sales and market share to grow in the coming months.
"easyJet is the outperformer today, having underperformed all year compared to Ryanair. But there might now be an improvement in earnings relative to Ryanair, so that could start to reverse that trend," Chris Beauchamp, market analyst at IG, said.
Ryanair cited adverse foreign exchange effects as hitting its profit, but supportive forex conditions for Burberry could not help the luxury firm much.
It slumped 7.2 percent and was on track for its biggest daily fall in more than four years after reporting results, with analysts at Liberum citing weakness in its wholesale figures despite a surge in sales in its home market as tourists took advantage of a lower pound.
"There was a bit of an expectation that, if sales were flat, the currency conversion would actually create some uptick there in underlying earnings," Jonathan Roy, advisory investment manager at Charles Hanover Investments, said.
"However, we've seen a bit of a slowdown in sales, which has really negated any positive currency impact."
Burberry has rallied over 20 percent since the UK voted to leave the European Union in June, benefiting from a drop in sterling which makes its goods cheaper for foreign buyers.
Burberry was also joined by education publisher Pearson (L:PSON), which fell 2.3 percent after several brokers cut their price targets on the stock.
Pearson slumped in the previous session after reporting an underwhelming set of figures, and Tuesday's fall took its losses to more than 11 percent for this week.
British online fashion retailer ASOS (LON:ASOS) fell 8.8 percent. While its results were seen as solid, it has rallied over 100 percent since February and hit a 2-1/2 year high on Monday in the face of tough conditions in the UK clothing market.
Peer Next (L:NXT) rose 5.3 percent, the top FTSE 100 riser, after Deutsche Bank (DE:DBKGn) reiterated a "buy" rating on the stock.
Tesco (L:TSCO) rose 3.5 percent after it grew its market share for the first time in five years, an indication that it is recovering from years of turmoil.
Miners were among the biggest risers on the index, up 1.9 percent, tracking gains in the underlying price of copper, which was supported by a weaker dollar.
The FTSE 100 ended off of its highs, hit by a rise in sterling as inflation rose and there were suggestions that parliament will have to ratify a British deal to leave the European Union, possibly lessening the chances of a "hard" Brexit which might end easy single market access when Britain leaves the European Union.
A dip in the price of oil also saw the energy sector give up some of its earlier gains.