By Shivani Kumaresan and Devik Jain
(Reuters) -London's FTSE 100 rebounded on Wednesday, supported by positive earnings updates from companies including Diageo (LON:DGE), while stronger than expected monthly GDP data bolstered optimism about a sharp recovery from the pandemic-driven slump.
The blue-chip index rose 0.8% after slumping 2.6% in the previous session. Spirits maker Diageo climbed 3.4% after it forecast organic operating profit growth of at least 14% in its current fiscal year and restarted its capital return programme. [nL4N2MZ1S4]
Spirax-Sarco Engineering gained 1.9% as JP Morgan raised its price target on the stock after an upbeat trading update from the valve maker.
Official data showed Britain's economy shrank by a less than feared 1.5% in the first quarter, when the country was under a third lockdown. In March, the economy grew by 2.1% from February led by the retail sector.
"Today's GDP figures for March are heavily driven by the reopening of schools, given child numbers feed directly into the calculations of education output," said James Smith, developed markets economist at ING.
"With a further reopening step now formally approved for Monday, we think GDP growth could come in just shy of 5% in the second quarter."
The FTSE 100 has gained about 8.4% year-to-date on optimism that speedy COVID-19 vaccinations and constant policy support from the government would drive a stronger economic recovery.
The domestically focused mid-cap FTSE 250 index fell 0.3%.
Globally, stronger-than-expected inflation data lifted U.S. Treasury yields, underscoring concerns among some investors that the Federal Reserve could be wrong in its prediction that inflation pressures in the United States are "transitory". [MKTS/GLOB]
UDG Healthcare jumped 20.7% after private equity firm Clayton, Dubilier & Rice (CDR) agreed to buy the pharmaceuticals services company for 2.6 billion pounds ($3.7 billion). [nL1N2MZ0E1]
However, London-listed shares of Just Eat (LON:JE) Takeaway.com NV slipped 8.3% to the bottom of the FTSE 100 index after rival food delivery firm Delivery Hero announced a launch of operations in Berlin. [nL1N2MZ0IJ]