By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- U.K.'s FTSE 100 headed for its first gain in three days on Tuesday, with upbeat earnings reports from GKN PLC and Next PLC lifting the trading mood, although shares of BP PLC bucked the positive trend amid concerns on the fallout from new, tough Russia sanctions.

The FTSE 100 index climbed 0.3% to 6,806.90, recovering from a 0.1% loss on Monday.

Leading advancers, shares of GKN rallied 6.8% after the car-parts maker posted an increase in first-half profit.

Next advanced 2.6% after the clothing retailer raised its full-year profit guidance and reporting strong sales for the first half.

Standard Chartered PLC put on 2.2% after J.P. Morgan Cazenove lifted the bank to overweight from neutral. The analysts said the upgrade comes after "material underperformance" over the past year and as they anticipate some of the earnings headwinds to abate from the end of 2014.

Heavyweight BP (BP) erased earlier gains, losing 0.8% as uncertainty over the impact of sanctions on Russia hurt investor appetite. The U.K. oil giant warned in its second-quarter earnings report that further economic restrictions on Russia and energy major Rosneft could adversely impact its business.

The U.S. and European Union agreed on Monday to adopt the toughest sanctions yet on Russia this week to force Moscow to cut support for the pro-Russia separatists. The EU -- Russia's largest trading partner -- is expected to announce the new measures as early as Tuesday when the 28 national ambassadors meet to finalize the sanctions.

In data news, the Bank of England said the number of loans approved for house purchases in the U.K. rose more than expected to a four-month high in June. Approvals came in at 67,196, above the 63,000 expected by analysts.

The improvement signals that the mortgage market is adapting to tougher measures that have been imposed to dampen risky lending and take the heat out of the housing markets. BOE officials, including Governor Mark Carney, and U.K. Chancellor of the Exchequer George Osborne, have expressed concerns with the rapid rise in home prices, worried that they could derail the country's economic recovery.

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