By Atul Prakash
LONDON (Reuters) - Britain's blue-chip share index advanced for a seventh straight day on Friday, putting it on course for its biggest weekly gain in more than three years, as telecoms shares rose on the prospect of consolidation in the sector.
Telecoms group BT (L:BT) rose 2.2 percent and Vodafone (L:VOD) 1.4 percent, making them two of the top-weighted gainers in the FTSE 100 index (FTSE). The gains came after Hutchison Whampoa (HK:0013), the owner of Britain's Three Mobile network, agreed to buy 02, the British mobile business of Telefonica (MC:TEF).
The FTSE 100 index still underperformed some European markets, though. The index was up just 0.3 percent by 1200 GMT, compared with nearly 2 percent for some European indices, which got a boost from the quantitative easing programme the European Central Bank finally announced on Thursday.
The UK mining index (FTNMX1770) was the worst-peforming sector of the FTSE, falling 2 percent. Mining companies Antofagasta (L:ANTO), Glencore (L:GLEN) and Rio Tinto (L:RIO) fell 2 to 4 percent.
"The FTSE is being held back relative to euro zone stocks by commodity prices, which are generally under pressure following sharp euro weakening because they are priced in dollars," Edmund Shing, global equity fund manager at BCS Asset Management, said.
"The U.S. currency has strengthened further given its de facto global safe-haven status following the ECB's QE announcement, putting pressure on miners and on the broader stock market as commodity stocks have a much heavier weighting in the FTSE 100 index than in other major European indexes."
Metals and energy companies have about 22 percent weighting in the FTSE 100 index, against just about 6 percent in some euro zone share indexes, analysts said.
Despite the underperformance, the FTSE 100 was up about 4 percent this week and headed for its best weekly gain since late 2011 after the Hutchison Whampoa-Telefonica deal was announced.
Investors were pricing in higher margins for UK mobile operators Vodafone, Three and EE, which BT is in talks to acquire.
"The market as a whole should be an awful lot less competitive than it otherwise would have been," said Andrew Hogley, an analyst at Banco Espirito Santo Investment Bank. "That's a positive for margins and profitability."
After the euphoria caused by the ECB's quantitative easing programme, traders saw a potential hurdle in Greek elections this weekend. Polls show the anti-bailout party Syriza is set to win.
(Additional reporting By Francesco Canepa; Editing by Larry King)