Bloomberg News

U.K. Stocks Climb After Three-Day Slide; Lloyds, Kazakhmys Gain

July 19, 2011

July 19 (Bloomberg) -- U.K. stocks gained for the first time in four days as better-than-forecast data from the U.S. on housing starts and corporate earnings boosted optimism in the outlook for the world’s largest economy.

Lloyds Banking Group Plc rallied 4.3 percent for the biggest increase in the benchmark FTSE 100 Index. Kazakhmys Plc, Cairn Energy Plc and Vedanta Resources Plc led resources shares higher as each rose more than 2 percent. Johnson Matthey Plc advanced 4 percent after the manufacturer of a third of all auto-catalysts said profit rose 19 percent.

The FTSE 100 rose 0.7 percent to 5,789.99 at the 4:30 p.m. close in London. The gauge has still fallen 5 percent since February amid speculation that European banks will need to raise more capital as stress tests failed to allay investor concern that lenders have insufficient capital to absorb losses. The broader FTSE All-Share Index climbed 0.6 percent and Ireland’s ISEQ Index advanced 0.5 percent.

“I wouldn’t say this is fundamental buying and everyone going, oh everything’s fine, let’s go off to the races,” said Louise Cooper, markets analyst at BGC Partners LP in London. “There’s still huge uncertainty out there. I think this could just be a little bit of a dead-cat bounce.”

EU Meeting

European Union government chiefs plan to meet for the second time in a month on July 21, aiming to break a deadlock over a new Greek rescue that has spooked investors. Spanish and Italian bonds yields surged yesterday, piling pressure on officials to end the turmoil.

“There’s still huge uncertainty out there and there’s still a lot of hope in the market that something will come out of” the EU meeting, said BGC’s Cooper. “It’s a one-day meeting in a crisis by a committee made up of a bunch of politicians who don’t really understand how financial markets work.”

Housing starts in the U.S. rose more than forecast in June to the fastest pace in five months, led by a surge in work on multifamily dwellings like apartments. Work began on 629,000 houses at an annual pace, up 14.6 percent from the prior month, figures from the Commerce Department showed today.

International Business Machines Corp., the biggest computer-services company, reported sales that beat analysts’ estimates and lifted its profit forecast amid buoyant demand for software. Among the 36 companies in the Standard & Poor’s 500 Index that have posted results since July 11, 31 beat the average analyst estimate for per-share profit, data compiled by Bloomberg show.

Lloyds, Barclays

Lloyds, the U.K.’s biggest mortgage lender, rallied 4.3 percent to 43.14 pence and Barclays Plc gained 1.9 percent to 211.6 pence.

Basic-materials shares led gains in the FTSE 100. Kazakhmys, Kazakhstan’s biggest copper producer, rose 3.2 percent to 1,343 pence and Cairn climbed 3 percent to 382.7 pence. Vedanta advanced 2.7 percent to 1,842 pence.

Johnson Matthey advanced 4 percent to 2,016 pence after saying underlying pretax profit climbed to 98.2 million pounds ($158 million) in the quarter through June, and first-half performance will be “significantly” better than a year earlier.

British Sky Broadcasting Group Plc gained 2.8 percent to 734 pence as Chairman James Murdoch gave evidence to a panel of lawmakers on phone hacking by newspapers. Murdoch joined his father Rupert, chief executive officer of the broadcaster’s biggest shareholder, News Corp., in giving evidence to a parliamentary committee investigating phone hacking today.

IG Group Holdings Plc advanced 5.4 percent to 433.7 pence after the owner of the IG Index financial spread-betting brand said net trading revenue increased 7.3 percent to 320.4 million pounds, led by a 21 percent gain in continental Europe.

--Editor: Andrew Rummer

To contact the reporter on this story: Conor Sullivan in London at csullivan39@bloomberg.net

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


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