By Kit Rees and Alistair Smout
LONDON (Reuters) - Britain's top share index closed higher on Wednesday after positive company results from ARM Holdings (L:ARM), Merlin Entertainments and Sky.
Chip designer ARM, whose products are used by Apple (O:AAPL), surged 6.5 percent, its biggest daily rise in two years. It reported a 27 percent rise in third-quarter profit and its confident outlook alleviated concerns about a slowdown in the semiconductor business.
"ARM is the most disruptive company on the planet. One that just a fraction of the market cap of the companies it is disrupting," Neil Campling, senior analyst at brokerage Aviate Global, wrote in a note. The results indicated that the company is gaining further market share, he said.
European pay-TV group Sky rose 2.5 percent after posting first-quarter operating profits that exceeded forecasts, helped by broadband additions in Britain.
Britain's Merlin Entertainments rose 4.7 percent after announcing that it will take its Legoland amusement park to Shanghai as part of a deal agreed with investment firm China Media Capital during the state visit of Chinese President Xi Jinping.
Reckitt Benckiser rose 2.5 percent, touching a record high. The company raised its full-year sales outlook following a bigger-than-expected gain in third-quarter sales, helped by consumer health products.
The FTSE 100 index was broadly in line with its European peers, up 0.1 percent at 6,348.42 points at its close.
Pearson (L:PSON) fell nearly 16 percent after the British education publisher said that lower enrolments at some colleges in the United States and a decline in school textbook purchases in some parts of South Africa would cut into full-year results.
"With enrolment down, it hits their bottom line, and I think that's what the market is punishing the stock for ... you're looking at a lower income stream for the next couple of years for Pearson," Richard Styger, a trader at Timber Hill, said.
Among mid-caps, Home Retail slumped 15.8 percent after Britain's biggest household goods retailer issued a profit warning because of weak Argos trading.
"Despite being sellers, this has somewhat exceeded even our bearish anticipation," analysts at Haitong Research said in a note, reiterating their "sell" rating on the stock.
"The unwinding of the Argos story leaves us needing to be persuaded that it is not staring into an abyss."