Bloomberg News

U.K. Stocks Gain for Second Day; Glencore Rises, IAG Declines

June 06, 2011

June 6 (Bloomberg) -- U.K. stocks rose for a second day as gains among raw-material companies outweighed declines at International Consolidated Airlines Group SA.

Glencore International Plc climbed 2 percent as Deutsche Bank AG advised buying the stock. Anglo American Plc led commodities shares higher as copper rallied in London. IAG, Europe’s third-biggest airline, fell 3 percent as Goldman Sachs Group Inc. advised reducing holdings of travel and leisure shares.

The benchmark FTSE 100 Index gained 8.15, or 0.1 percent, to 5,863.16 at the 4:30 p.m. close in London, while the FTSE All-Share Index also climbed 0.1 percent. The Irish market was closed for a public holiday.

The FTSE 100 fell 1.4 percent last week, its biggest drop in a month, as reports on U.S. employment and factory orders trailed economists’ forecasts and a gauge of Chinese manufacturing expanded at the slowest pace in nine months.

“The global economy is experiencing a mid-cycle slowdown, which is understandable given the very sharp pace of recovery in the likes of industrial production over the last two years,” Neill Nuttall, chief investment officer of the global multiasset group at JPMorgan Asset Management in London, wrote in a report. “Supply chain disruptions following the distressing events in Japan earlier this year, plus the timing of holidays around Easter, may be sending false signals in the short term. A mid- cycle slowdown would typically be positive for risk assets.”

A report today from the Engineering Employers Federation, a lobby for manufacturers, showed U.K. factory production strengthened in the second quarter as companies benefited from increasing export orders.

Anglo American, Rio

Anglo American gained 1.5 percent to 2,984 pence. Rio Tinto Group rose 1 percent to 4,148 pence. Copper and lead prices increased on the London Metal Exchange.

Glencore climbed 2 percent to 515 pence. Deutsche Bank said shares of the world’s largest listed commodity trader are undervalued as it issued a “buy” recommendation on the stock.

Aegis Group Plc rallied 6.9 percent to 151 pence after the London-based media services company said it has held talks about selling its market-research unit Synovate Ltd. to Ipsos SA. Synovate could fetch 450 million pounds ($736 million) to 580 million pounds, according to analysts from Exane BNP Paribas and Panmure Gordon & Co.

Airlines Fall

IAG slid 3 percent to 229.6 pence. The International Air Transport Association cut its 2011 industry profit forecast by 54 percent because of higher oil prices, popular revolts in the Middle East and North Africa and the earthquake in Japan.

Hochschild Mining Plc, a producer of silver in Peru, slumped 8.5 percent to 500 pence after opposition candidate Ollanta Humala claimed victory in the South American country’s presidential runoff. The one-time supporter of Venezuelan President Hugo Chavez has in recent weeks backed away from an earlier pledge to rewrite the constitution and unilaterally raise royalty fees on mining and gas production.

IMI climbed 1.7 percent to 1,038 pence as Citigroup Inc. rated shares of the engineering firm among its “top pick” of U.K. engineers.

HMV Group Plc soared 49 percent to 12.3 pence, its largest one-day surge on record, as the Sunday Times reported that the U.K.’s biggest CD and DVD retailer will soon agree a two-year refinancing plan valued at about 210 million pounds.

--Editor: Will Hadfield

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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