Bloomberg News

U.K. Stocks Rise on Bernanke Comments; Fresnillo, Burberry Climb

July 13, 2011

July 13 (Bloomberg) -- U.K. stocks gained for the first time in four days after Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank is “prepared to respond” if the economy requires assistance.

Fresnillo Plc, the world’s largest primary silver miner, led materials companies higher. Burberry Group Plc advanced to a record as sales climbed on increased demand from Asian countries. British Sky Broadcasting Group Plc climbed 2 percent even after News Corp. withdrew its bid for Britain’s biggest listed broadcaster.

The FTSE 100 Index rose 0.6 percent to 5,906.43 at the 4:30 p.m. close in London, ending the gauge’s largest three-day retreat since March. The FTSE All-Share Index also gained 0.6 percent today, while Ireland’s ISEQ Index added 0.7 percent.

The FTSE 100 has still retreated 3 percent from this year’s high in February as concern intensified that the euro-area’s sovereign-debt crisis is spreading.

“Its a good sign short-term, but there are so many underlying worries that what he said will be soon forgotten with what’s happening in the euro zone,” said Martin Dobson, head of trading at Westhouse Securities in London. If Bernanke loosens monetary policy “there will probably be a knock-on effect, but the European markets are going to be led by the sovereign debt crisis rather than the U.S. economy.”

Bernanke told Congress the Fed is prepared to take additional action, including buying more government bonds, if the economy appears to be in danger of stalling.

‘Deflationary Risks’

“The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,” Bernanke said in prepared testimony before the House Financial Services Committee in Washington. “The Federal Reserve remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate.”

China’s gross domestic product increased 9.5 percent in the second quarter from a year earlier, the country’s statistics bureau said today. That beat the median estimate of 9.3 percent in a Bloomberg survey of 18 economists. China’s industrial production advanced 15 percent in June, the largest increase since May 2010.

Unemployment Gains

U.K. unemployment claims rose at their fastest pace since May 2009 last month, the Office for National Statistics said today. Jobless benefit claims rose 24,500 from May to 1.52 million, more than the 15,000 median prediction in a Bloomberg survey of 21 economists. Unemployment, measured by International Labour Organization methods, fell 26,000 to 2.45 million people in the quarter through May.

Mining and resources companies had the biggest gains in the FTSE 100. Fresnillo rose 5.6 percent to 1,520 pence after Chief Executive Officer Jaime Lomelin said its Saucito mine in Mexico may double output in “coming years.”

Kazakhmys Plc climbed 4 percent to 1,365 pence and Randgold Resources Ltd. increased 4.3 percent to 5,440 pence.

Burberry gained 6.5 percent to 1,531 pence, the highest price since its initial public offering nine years ago. The U.K.’s largest luxury goods maker said revenue surged 30 percent to 367 million pounds ($585 million) in the three months to June 30. That beat the average estimate of 11 analysts compiled by the company for sales of 344 million pounds.

BSkyB Bid Dropped

BSkyB advanced 2 percent to 705.5 pence, rebounding from the lowest level in a year. News Corp. withdrew its bid to gain full control of the broadcaster after U.K. lawmakers demanded the offer be scrapped because of a phone-hacking scandal at its newspapers.

“This didn’t come as a total surprise to the market,” said Mark Kelly, special situations strategist at Olivetree Securities Ltd. “BSkyB shares were already trading with very little M&A expectation in them.”

SuperGroup Plc surged 21 percent to 1,062 pence, the biggest gain since it first sold shares in March 2010, as the owner of the Superdry clothing brand said retail sales rose 48 percent in the 10 weeks to July 10. The shares had dropped 32 percent in 2011 before today as the company faced what Peel Hunt analyst John Stevenson last month called a “wall of skepticism” over the longevity of its brand.

Marks & Spencer Group Plc fell 2.5 percent to 363.8 pence as the U.K.’s largest clothing retailer said sales at stores open at least a year rose 1.7 percent, missing the median estimate of 2 percent in a Bloomberg survey of eight analysts.

--Editors: Andrew Rummer, Will Hadfield

To contact the reporter on this story: Conor Sullivan in London at

To contact the editor responsible for this story: Andrew Rummer at

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