Bloomberg News

U.K. Stocks Climb for Third Day, Led by Barclays, Kingfisher

September 15, 2011

Sept. 15 (Bloomberg) -- U.K. stocks rose for a third day after Germany and France reiterated that Greece will remain a member of the euro and the European Central Bank stepped up funding support to the region’s banks.

Barclays Plc and Lloyds Banking Group Plc jumped at least 4 percent after the ECB said it will lend dollars to euro-area banks in coordination with the Federal Reserve and other central banks. Kingfisher Plc, Europe’s largest home-improvement retailer, surged 4.8 percent after reporting first-half profit that beat analysts’ estimates.

The benchmark FTSE 100 Index increased 110.52, or 2.1 percent, to 5,337.54 at the 4:30 p.m. close in London. The FTSE 100 has lost 10 percent since the start of July as concern mounted that Greece will fail to repay all its debt and banks are struggling to get finance amid an escalating sovereign-debt crisis. The FTSE All-Share Index also gained 2.1 percent, while Ireland’s ISEQ Index slid 0.2 percent.

French President Nicolas Sarkozy and German Chancellor Angela Merkel said late yesterday they are “convinced” Greece will stay in the euro area as they faced international calls to increase efforts to fight the sovereign-debt crisis.

“A slightly improved newsflow on the euro zone and banks has been seized upon by investors to move the market up,” said Ian Murrell, an analyst at Pritchard Stockbrokers Ltd. in London. “Markets needed a rally and they got a reason for it.”

Stocks also rose as a U.S. report showed that industrial production in the country unexpectedly rose in August. Output at factories, mines and utilities climbed 0.2 percent after a 0.9 percent gain in July, figures from the Federal Reserve showed today. Economists had forecast no change, according to the median estimate in a Bloomberg News survey.

Barclays, Lloyds Climb

Barclays gained 4 percent to 158 pence. Lloyds added 7.2 percent to 35.91 pence. Royal Bank of Scotland Group Plc advanced 4 percent to 23.72 pence. A measure of euro-area banks rallied 6.3 percent for its biggest jump since January.

The Frankfurt-based ECB said that, in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, it will conduct three U.S. dollar liquidity-providing operations with a maturity of approximately three months. The loans are in addition to the bank’s regular seven-day dollar offerings. The ECB will conduct them as fixed- rate tenders with full allotment, it said in a statement.

Ring Fencing Banks

Separately, Deutsche Bank AG said U.K. recommendations that lenders should build firewalls between their consumer units and investment banks and increase capital may be less costly than some investors and analysts had estimated.

“We think the ring-fence idea has been proposed in a format which minimizes costs to banks and their customers, but retains the advantages of greater depositor protection,” analysts Jason Napier wrote in a report today. They added that RBS and Lloyds shares are “oversold” and kept “buy” recommendations on both.

Kingfisher jumped 4.8 percent to 251.1 pence. The retailer reported that its first-half profit rose 24 percent to 439 million pounds ($694 million) as growth in France offset lower U.K. sales and as the company saved money by getting more goods direct from suppliers. That beat the average estimate of 12 analysts compiled by Bloomberg of 408 million pounds.

Associated British Foods Plc advanced 1.6 percent to 1,083 pence. The company, which said on Sept. 12 that second-half earnings will meet its expectations, was upgraded by UBS AG to “buy” from “neutral.”

Burberry, Booker Group

Burberry Group Plc, the U.K.’s largest luxury-goods maker, rose 6.6 percent to 1,457 pence. China may cut luxury-goods taxes by the end of the year, the National Business Daily reported. The world’s second-biggest economy will cut tariffs on cosmetics first. Clothes and leather goods might follow, the newspaper said, citing an unidentified person familiar with the situation.

Booker Group Plc rallied 7.9 percent to 74.55 pence. The wholesaler of grocery products said second-quarter comparable sales rose 5.6 percent and total sales gained 7.6 percent in the 12 weeks ended Sept. 9.

Thomas Cook Group Plc, Europe’s second-largest tour operator, surged 22 percent to 47.8 pence for the largest gain on the FTSE 250 Index. About 9.1 percent of the company’s issued shares have been borrowed, according to Data Explorers, probably to short-sellers who expect to buy back the securities more cheaply at a later stage after selling them.

Dunelm Group Plc surged 5.8 percent to 451.9 pence, its biggest gain in more than two months. The company, which sells home furnishings, said full-year pretax profit increased 9 percent to 83.6 million pounds.

--With assistance from Julie Cruz in Frankfurt. Editor: Will Hadfield

To contact the reporter on this story: Alexis Xydias in London at

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

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