June 9 (Bloomberg) -- U.K. stocks climbed as commodity and media stocks rallied, the U.S. trade deficit unexpectedly narrowed amid record exports and consumer confidence improved.
Weir Group Plc rallied 4.8 percent after RBC Capital Markets raised its price estimate on the shares and reiterated it as one of the broker’s top picks. Anglo American Plc led raw- material shares higher, as a gauge of the industry’s shares rebounded from a two-week low. WPP Plc, the world’s biggest advertising company, and Pearson Plc both gained more than 1 percent.
The benchmark FTSE 100 Index gained 47.45, or 0.8 percent, to 5,856.34 at the 4:30 p.m. close in London, rebounding from a two-month low. Still, the measure has fallen 2.2 percent this month as reports on U.S. employment and factory orders added to concern that the economy is faltering. The FTSE All-Share Index advanced 0.7 percent today, while Ireland’s ISEQ Index increased 1.1 percent.
“The slightly better than expected U.S. trade deficit number finally provided something positive for investors to latch on to,” said Kishan Mandalia, a sales trader at City Index Ltd. in London. “Valuations for commodity related stocks are particularly compelling.”
The Federal Reserve said yesterday after European markets closed that the economy expanded at a “steady pace” in most of the U.S., while slowing in 4 of 12 regions as consumers contended with higher food and fuel prices and shortages of parts reduced car production.
The report underscores Chairman Ben S. Bernanke’s statement on June 7 that the central bank should maintain record stimulus to bolster a “frustratingly slow” recovery. He predicted that the economy will pick up in the second half of the year as energy prices moderate and factory disruptions ease as suppliers of parts from Japan recover from an earthquake and tsunami.
Data today showed the U.S. trade deficit narrowed in April reflecting a plunge in auto and oil imports combined with record exports. The gap shrank 6.7 percent to $43.7 billion, the lowest since December, the Commerce Department said.
A separate report showed U.S. applications for unemployment insurance payments unexpectedly rose last week. Jobless claims increased by 1,000 to 427,000 in the week ended June 4, according to the Labor Department.
The European Central Bank kept its benchmark interest rate at 1.25 percent today, while the Bank of England held its key rate at 0.5 percent and left its bond-purchase program unchanged at 200 billion pounds ($328 billion).
ECB President Jean-Claude Trichet signaled the bank intends to raise interest rates next month, saying “strong vigilance” is warranted to contain inflation.
Weir Group gained 4.8 percent to 2,050 pence as RBS analysts raised earnings-per-share estimate for 2013 for the company 12 percent.
Anglo American rose 2.2 percent to 2,988.5 pence. Rio Tinto Group Plc gained 1.3 percent to 4,199.5 pence. The FTSE 350 Mining Index rebounded from its lowest level in two weeks.
WPP gained 1.5 percent to 734.5 pence. Pearson gained 2.1 percent to 1,161 pence.
Lookers Plc jumped 3.6 percent to 72.5 pence, extending yesterday’s 9.4 percent rally. The U.K. car dealership owner and auto-parts supplier said it received an “indicative” proposal for a possible cash offer of 80 pence a share from a group of investors led by Jack Petchey.
BowLeven, Home Retail
BowLeven Plc rallied 11 percent to 325.25 pence after reporting its first oil flow test in the Douala Basin offshore Cameroon.
Home Retail Group Plc tumbled 14 percent to 174.5 pence, dragging retailers lower, as sales at Argos stores open at least a year fell.
Dixons Retail Plc slumped 8.9 percent to 17.58 pence.
JD Sports Fashion Plc declined 4.1 percent to 939 pence after saying its “cautious” outlook is unchanged based on downward pressures in consumer spending and an increase in VAT.
Halfords Group Plc bucked the trend in retailers, rallying 2 percent to 405.9 pence. The U.K. seller of car parts and bicycles said profit rose 11 percent last year as improved margins offset a squeeze on consumer spending.
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