Bloomberg News

U.K. Stocks Rise for Fifth Day; BG Group, Lloyds, LSE Advance

June 30, 2011

June 30 (Bloomberg) -- U.K. stocks climbed for a fifth day as a vote by Greek lawmakers boosted speculation that the nation will avoid a default on its debt and U.S. business activity unexpectedly expanded.

BG Group Plc soared 4.9 percent after doubling the estimate of its reserves and resources in the Santos Basin in Brazil. Lloyds Banking Group Plc rallied 9.7 percent after saying it will cut jobs to reduce costs. London Stock Exchange Group Plc jumped the most in more than two years amid speculation it will become a bid target after scrapping a planned merger with Canada’s TMX Group Inc.

The benchmark FTSE 100 Index gained 89.76, or 1.5 percent, to 5,945.71 at the 4:30 p.m. close in London for the biggest two-day rally this year. The FTSE All-Share rose 1.5 percent today, while Ireland’s ISEQ Index advanced 0.6 percent.

“The party shows no sign of abating for equity markets,” Ben Critchley, a sales trader at IG index in London, wrote in an e-mail. “Better-than-expected Chicago PMI data and the successful passage of the second Greek austerity vote propelled major indices ever higher.”

The FTSE 100 has rallied 4.8 percent in the past five days as concern eased that Greece will default on its debt. The advance trims losses this month to 0.7 percent and brings its quarterly gain to 0.6 percent. The measure has increased 0.8 percent in 2011.

Greek Vote

Greek Prime Minister George Papandreou’s drive to stave off the euro area’s first sovereign default stayed on track after lawmakers backed a bill to authorize an austerity plan required to keep rescue aid flowing.

Papandreou won the vote by 155 to 136, allowing him to implement a 78 billion-euro ($112 billion) package of tax increases and asset sales that was a condition of receiving further European Union aid. Those steps were approved in a vote yesterday which was marred by street violence as police fired tear gas on crowds.

In the U.S., the Institute for Supply Management-Chicago Inc. said its business barometer unexpectedly rose to 61.1 in June from 56.6 a month earlier. Economists projected the gauge would drop to 54, according to the median estimate in a Bloomberg News survey. Figures greater than 50 signal expansion.

Consumer confidence rose to the highest level in 10 weeks as falling gasoline prices provided relief to Americans contending with 9.1 percent joblessness. The Bloomberg Consumer Comfort Index increased to minus 43.9 for the period ended June 26 after dropping to minus 44.9 the prior week.

‘Optimistic Outlook’

“We remain constructive on global equity markets,” Robert Buckland, the head of global equity strategy at Citigroup Inc., wrote in a report. “The optimistic outlook is based on reasonable valuations, low interest rates and positive earnings trends.”

BG Group rallied 4.7 percent to 1,414 pence, the biggest gain in five months, as the U.K.’s third-largest oil and gas producer doubled its estimate of reserves and resources in the Santos Basin in Brazil to about 6 billion barrels of oil.

Lloyds surged 9.7 percent to 49 pence, paring its quarterly slump to 16 percent. The U.K.’s largest mortgage lender said it will cut 15,000 jobs and reduce costs by an additional 1.5 billion pounds ($2.4 billion) as it withdraws from overseas units and increases its U.K. focus.

LSE jumped 11 percent to 1,061 pence, the biggest increase since March 2009, after the London and Toronto exchanges said they won’t proceed with their friendly C$3.29 billion ($3.4 billion) merger because they didn’t get the required two-thirds of votes cast by proxy before today’s shareholder meeting.

Exchange Takeovers

The rejection has left LSE without a partner amid the biggest wave of exchange takeovers ever, according to Bloomberg data. Nasdaq OMX Group Inc., the second-largest U.S. exchange company, failed three times to buy LSE in the past decade.

Berendsen Plc gained 7.8 percent to 545 pence after the supplier of textile-cleaning services forecast that first-half pretax profit will be “significantly ahead” of the same period a year earlier.

Flybe Group Plc rallied 9.5 percent to 184 pence after saying it has held “active discussions” about partnerships with several flag carriers in mainland Europe.

Greene King Plc sank 5.9 percent to 487.4 pence, retreating after a four-day rally. The U.K. pub owner forecast “another challenging year as continued high inflation and the impact of government cutbacks limit consumer spending power.”

Premier Foods Plc slumped 22 percent to 19.02 pence, the largest drop since 2008. The U.K.’s biggest food manufacturer said it expects profit for ongoing business in the first half of between 65 million pounds and 70 million pounds, compared with 94 million pounds in the equivalent period in 2010.

--Editors: Andrew Rummer, 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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