FTSE rises after earnings lift

Alistair Smout

* FTSE 100 index up 0.7 percent

* M&S beat profit forecasts in quarterly report

* Trading thin ahead of tight U.S. elections

LONDON, Nov 6 (Reuters) - Britain's blue-chip stocks rose on

Tuesday, buoyed by some encouraging earnings reports but with

trade cautious ahead of a tight U.S. presidential election.

The FTSE 100 was up 39.26 points, or 0.7 percent, at

5,878.32 by 1145 GMT, after slipping 0.5 percent on Monday in

thin volume.

Marks & Spencer rose 1 percent after the bellwether

British retailer beat profit forecasts. Shares in the company

have risen 14 percent over the last three months, lifted by

persistent speculation regarding a possible offer from private

equity or a sovereign wealth fund.

The UK retail sector is facing significant headwinds,

demonstrated by a sharp deceleration of British retail sales in

October, according to the British Retail Consortium, and there

risk of profit taking on the share price.

Despite this, there are "a number of long-term drivers of

capital value and dividends that lead us to retain a positive

stance over a broader horizon," Clive Black, analyst at Shore

Capital, said, citing new channels in beauty and e-commerce


He also saw scope for substantial free cash flow in the long

term and potential from underpeforming core womenswear.

Technology firm ARM gained 3.5 percent on reports

that Apple may use the company's chips in their desktop


The company also said it would contribute $167.5 million to

a consortium to acquire the rights to a MIPS Technologies'

portfolio of hundreds of patents. ARM traded over 120 percent of

its average 90 day volume by 1120 GMT.

Elsewhere, InterContinental Hotels, the world's

biggest hotelier, also gained on the back of good results,

adding 1.7 percent after it unveiled operating profit of $167

million in the quarter to the end of September, marginally

beating consensus forecasts.

This came as the British-based group said it is opening up

talks on the sale of its New York Barclay hotel to a wider group

of prospective buyers after holding lengthy exclusive talks with

one group.

By 1130 GMT, trading volumes were at a mere 28 percent of

the 90 day average, which itself has been suppressed by weak

activity over the summer, as investors awaited the outcome of

Tuesday's presidential election in the U.S. before taking

"Markets will be very quiet today with traders watching the

U.S. elections above anything else," said Lex van Dam, hedge

fund manager at Hampstead Capital, which manages around $500

million of assets.

"The topic for the next two months will be how the

politicians are going to avoid the fiscal cliff (automatic

budget cuts) which might be easier if there is a clear winner


(Additional reporting by Tricia Wright. Editing by Jeremy