Bloomberg News

U.K. Stocks Advance for First Day in Three as RBS, Lloyds Rally

September 13, 2011

Sept. 13 (Bloomberg) -- U.K. stocks climbed, snapping a two-day selloff for the benchmark FTSE 100 Index, as banks rebounded from earlier losses.

Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc jumped more than 4 percent. Inmarsat Plc gained 2 percent amid speculation the company could be a takeover target. Sage Group Plc and Centrica Plc also climbed as analysts recommended the shares.

The FTSE 100 rose 44.63, or 0.9 percent, to 5,174.25 at the 4:30 p.m. close in London, having earlier lost 1.2 percent. The gauge last month slumped 7.2 percent, dragging equities to their cheapest valuation compared with estimated earnings since March 2009, according to data compiled by Bloomberg. The FTSE All- Share Index gained 0.8 percent today, while Ireland’s ISEQ Index rallied 1.5 percent.

“Traders are looking for any reason to buy at moment and this market is probably due a rally,” said Ian Murrell, an analyst at Pritchard Stockbrokers Ltd. in London “Investors want to buy banks for a market bounce but certainly not in any belief that the banking crisis is over.”

Stocks slumped yesterday as speculation mounted that Germany is preparing for Greece to default and as two people with knowledge of the matter said Moody’s Investors Service may downgrade French banks because of their Greek holdings. The rating company placed BNP Paribas SA, Societe Generale SA and Credit Agricole SA on review in June.

RBS, Lloyds

RBS gained 5.3 percent to 21.88 pence after tumbling more than 8 percent the previous two sessions. Lloyds rallied 4.2 percent to 31.83 pence today and Barclays Plc advanced 4.7 percent to 148.3 pence.

U.K. lenders followed European banks higher after BNP Paribas, France’s biggest bank, and Societe Generale rejected concerns over their access to funding. Both stocks dropped more than 8 percent earlier today, before closing higher.

Inmarsat gained 2 percent to 486.2 pence. Chief Executive Officer Andrew Sukawaty said it is “natural” for private- equity firms to consider an investment in the satellite company but said “there has been no formal approach.”

The London-based Times today cited bid speculation from a private equity company without saying where it got the information.

Sage Upgrade

Elsewhere, Sage Group gained 2.4 percent to 254.3 pence as Exane BNP Paribas raised its recommendation for the shares to “neutral” from “underperform.” Centrica gained 1.2 percent to 292.5 pence as Morgan Stanley raised its recommendation for utilities to “in line” from “cautious” and named the U.K. company as a “top pick.”

IG Group Holdings Plc also advanced, climbing 3.6 percent to 444 pence. The owner of the IG Index spread-betting brand said it benefited from an “absolute blowout” in sales as a result of market turmoil in August. Sales surged 26 percent in the three months to Aug. 31.

Cairn Energy Plc paced declining shares, dropping 8.2 percent to 287 pence. The Scottish oil company focusing on Greenland plugged the Gamma-1 exploration well after failing to find a “reservoir or hydrocarbon shows.”

Cairn last month plugged the LF7-1 exploration well, about 300 kilometers off Nuuk, Greenland’s capital, after failing to find oil.

Fresnillo Plc dropped 3 percent to 1,930 pence after Citigroup Inc. downgraded the silver producer to “sell” from “neutral,” saying the company’s earnings could be hit as the price of silver falls more than gold in a bear market.

--With assistance from Alexis Xydias in London. Editor: Andrew Rummer

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

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


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