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* FTSE 100 up 0.7 pct
* FTSE 250 up 0.6 pct
* Diageo (LON:DGE), Shell surge after strong results
* Unilever slides after flagging "challenging" 2019
Jan 31 (Reuters) - London's main bourse was higher on Thursday, notching up gains for a third straight session propelled by upbeat earnings reports from heavyweights Shell and Diageo and the U.S. Federal Reserve's dovish stance on future interest rate hikes.
The FTSE 100 .FTSE was up 0.7 percent by 0848 GMT after hitting its highest level in nearly three weeks, while the midcap index .FTMC rose 0.6 percent to their highest since last November.
The blue chips were on track for their best monthly performance since April last year.
The upbeat mood across European bourses followed Asia where shares bounced to a four-month high after the Federal Reserve pledged it will be patient with further interest rate hikes, signalling a potential end to its tightening cycle amid signs of slowing global growth. at home, uncertainties mounted for Britain with the European Union's chief Brexit negotiator saying that time was too short to find an alternative to the Irish border arrangement agreed in their divorce deal, as London wants.
With March 29 exit date fast approaching, a narrow majority in the British parliament instructed Prime Minister Theresa May this week to go back to Brussels to replace the Irish border arrangement. EU promptly reiterated that the deal was not open for renegotiation.
Topping the FTSE 100, Diageo, the world's largest spirits company, added nearly 4 percent after it reported higher half-year sales thanks to a boost from India and China. oil major, Shell RDSa.L , the most valued FTSE 100 firm, was close behind after it reported a forecast-beating 36-percent surge in 2018 profits thanks to cost savings.
Water utilities United Utilities UU.L and Severn Trent SVT.L that advanced 2.8 percent and 2.5 percent respectively after British water regulator Ofwat green-lighted their five-year business plans. in telecommunication giant BT BT.L and Unilever ULVR.L turned sour after the companies reported results, severely underperforming the main index.
"Commentary on uncertainties, including Brexit, leave open the possibility of a more challenging FY19/20," wrote Jefferies analysts about BT.
Asset manager Standard Life Aberdeen SLA.L dipped 3.2 percent, following a downgrade by Morgan Stanley (NYSE:MS) to equal-weight.
RPC RPC.L rose 4.6 percent, among top gainers on the midcap index, after U.S.-based Berry Global said it was considering a possible cash offer for the packaging products maker following Apollo Global Management's 3.3 billion pounds ($4.33 billion) deal.