Coca-Cola HBC leads FTSE share index higher

By Kit Rees

LONDON (Reuters) - Britain's top share index ended sharply higher on Friday, with bottling company Coca-Cola HBC rallying on the prospects of a margin recovery and commodities stocks partially recovering after slumping in the previous two straight sessions.

The blue-chip FTSE 100 index finished 1.7 percent higher, its biggest one-day percentage gain since mid-April. However, the benchmark index is still down 1.4 percent so far this year.

Coca-Cola HBC jumped 6.4 percent after Citigroup raised its rating on the stock to "buy" saying that concerns, which included a potential naira devaluation and rising world sugar prices, were priced in and the company had the potential for a visible margin recovery opportunity.

"With the shares trading at a 5-year peak discount to peers...we feel these concerns are priced in, providing a good opportunity to buy into improving fundamentals," Citi analysts said in a note.

Among sectoral gainers, the UK mining index rose 1 percent as metals prices recovered and some investors looked for bargains after of a sell-off in the previous two sessions. The energy index also rose 1.7 percent.

Miners Anglo American, Glencore, Rio Tinto, BHP Billiton and Antofagasta rose between 0.4 percent and 3.6 percent.

Outside of the blue chips, bookmaker Ladbrokes surged 6.5 percent after the British competition regulator said that Ladbrokes and Gala Coral would have to sell between 350 to 400 shops to win clearance for their merger.

Traders said that the number of shops the two firms would have to sell were less than expected.

"The regulator's been softer on the deal. It's not a done deal, but it's more doable now ... it's going in the right direction in favour of the merger," Zeg Choudhry, managing director at LONTRAD, said.

Electrical engineering company Spectris dropped 4.4 percent, hitting a three-month low after posting a softer first-quarter results.

The company said that trading conditions in the period continued to be challenging, and reiterated its 2016 oulook.

(Additional reporting by Atul Prakash; Editing by Toby Chopra and Angus MacSwan)