* STOXX 600 down 0.5 pct, weighed down by banks

* But index set for weekly achieve on M&A, earnings, Trump increase

* Swiss financial institution UBS drops after underwhelming outcomes

* But Tesco rallies on Booker acquisition deal

* Solid updates buoy LVMH, Wartsila (ADVISORY- Follow European and UK inventory markets in actual time on the Reuters Live Markets weblog on Eikon – see cpurl://apps.cp./cms/?pageId=livemarkets) Adds particulars, updates costs)

By Danilo Masoni

MILAN, Jan 27 European shares pulled again on Friday with UBS dragging financial institution shares decrease after posting a drop in full-year revenue, whereas Britain’s largest grocery store Tesco surged after a 3.7 billion-pound takeover of a provider.

The pan-European STOXX 600 index was down 0.5 % whereas UK’s FTSE was flat, supported by Tesco , which rose eight.4 % after agreeing to purchase wholesale provider Booker in a deal that cements its dominant place within the UK.

Booker shares hit a file excessive and have been the highest STOXX gainer, up greater than 15 %.

“At first glance Tesco’s merger with Booker makes perfect sense. Tie up the end-to-end wholesale/retail business and make savings in the process,” mentioned ETX Capital analyst Neil Wilson.

Investors additionally cheered to information that the UK grocery store expects to restart paying dividends once more.

UBS fell 3.4 %. The world’s largest wealth supervisor posted a 47 % fall in 2016 web revenue however struck a extra optimistic tone for 2017 as its fourth-quarter web revenue got here in nicely forward market expectations.

Baader Helvea analyst Tomasz Grzelak mentioned UBS delivered a stable replace due to very a powerful funding banking outcomes however outflows at its wealth administration operations upset.

“Considering that the … negatives are to be seen as phasing out in 2017, the results support our buy rating,” he added.

Losses in UBS helped drag Europe’s financial institution index down 1.4 %, making it the largest sectoral faller in Europe.

Elsewhere within the sector, UniCredit fell 4.4 % after a report mentioned the Italian lender could begin its multi-billion-euro capital hike on Feb. 6.

In spite of Friday’s weak point, the STOXX 600 stays near its highest in a couple of 12 months and set to finish the week with a achieve of round 1 %. The surge displays help from merger and acquisition exercise, optimism over U.S. President Donald Trump’s growth-boosting insurance policies and a superb begin to the incomes season.

According to JP Morgan, 59 % of the STOXX corporations which have reported to date beat incomes per share estimates , with progress operating at 11 % year-on-year, whereas greater than two thirds beat revenues forecasts.

There have been extra good incomes updates on Friday.

Shares in LVMH rose 1 % to strategy file highs after the world’s largest luxurious group posted a forecast-beating rise in 2016 outcomes, whereas Finnish ship engine and energy plant maker Wartsila climbed 7 %, additionally buoyed by stronger than anticipated outcomes.

Among excellent losers was on-line lottery agency Zeal Network. Its shares tumbled 22 % with merchants citing upset over its dividend plans and a below-consensus steering. (Reporting by Danilo Masoni)

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