Bloomberg News

U.K. Stocks Rise After Italian Vote; IAG, Rolls-Royce Advance

November 13, 2011

Nov. 11 (Bloomberg) -- U.K. stocks soared, recouping this week’s losses, after the Italian Senate approved austerity measures, raising optimism that euro-area policy makers will contain the debt crisis.

International Consolidated Airlines Group SA rose 4.9 percent after setting a 1.5 billion-euro ($2.04 billion) operating profit target for 2015. Rolls-Royce Holdings Plc gained 4 percent after reiterating profit growth in 2011. Schroders Plc, the British asset manager, jumped 6.8 percent after Deutsche Bank AG raised its recommendation on the shares.

The benchmark FTSE 100 Index advanced 100.56, or 1.9 percent, to 5,545.38 at the close in London. The gauge added 0.3 percent for the week after Italy pushed debt reduction measures through the Senate and Greece named a new unity government. The FTSE All-Share Index climbed 1.8 percent, while Ireland’s ISEQ Index increased 1.3 percent.

“The Italian and Greek situation is looking much better than it used to,” said Graham Bishop, a European equity strategist at the Royal Bank of Scotland Group Plc. Investors are now “slightly less worried,” he said.

The Italian Senate passed a vote on the austerity package today in an attempt to shore up investor confidence and lead to a new government that may be headed by former European Union Competition Commissioner Mario Monti.

The bill aimed at boosting growth and cutting Italy’s 1.9 trillion-euro ($2.6 trillion) debt, the world’s fourth biggest. Lawmakers rushed to pass the measures after Prime Minister Silvio Berlusconi’s parliamentary majority unraveled this week and bond yields surged to euro-era records.

Greek Government

In Greece, a new unity government led by Lucas Papademos will be sworn in today with a mandate to implement budget measures and decisions related to a 130 billion-euro bailout agreed on an Oct. 26. Elections may take place on Feb. 19.

IAG, the company created by the merger of British Airways and Spain’s Iberia, rose 4.9 percent to 148.7 pence after saying it targets an operating profit of about 1.5 billion euros in 2015. The company raised its forecast for savings generated from the combination of carriers to 450 million euros after five years from 400 million euros.

Rolls-Royce, which makes engines for the Airbus A380 Super Jumbo and the Eurofighter jet, rose 4 percent to 738 pence after saying it expects “good growth in underlying profit and a modest cash flow” in 2011. BAE Systems Plc, Europe’s largest defense company, rose 3.8 percent to 283.3 pence.

Anglo American Plc rose 3.5 percent to 2,467 pence. Shares rose for a second day after the miner sold a stake in its Chilean copper unit to Mitsubishi Corp. for $5.39 billion, thwarting Chile’s state-owned Codelco from acquiring a 49 percent stake in its unit in the country.

Schroders rose 6.8 percent to 1,393 pence after Deutsche Bank equity analyst Carolyn Dorrett raised the recommendation on the shares to “hold” from “sell”.

--Editors: Srinivasan Sivabalan, Peter Branton

To contact the reporters on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net;

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


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