Bloomberg News

U.K. Stocks Climb as German Confidence Improves; Petrofac Gains

December 13, 2011

Dec. 13 (Bloomberg) -- U.K. Stocks rebounded from yesterday’s biggest selloff in three weeks after German investor confidence rose and investor demand increased for Spanish debt, easing concern over the euro-area debt crisis.

BP Plc and Royal Dutch Shell Group Plc paced gains in crude oil amid speculation the Federal Reserve may tonight announce additional measures to stimulate growth. Petrofac Plc jumped 5.1 percent after the company boosted its profit forecast. Man Group Plc rallied as the hedge fund manager said it bought more shares.

The benchmark FTSE 100 Index advanced 62.29, or 1.2 percent, to 5,490.15 at the close in London. The FTSE All-Share Index climbed 1.1 percent, while Ireland’s ISEQ Index added 0.5 percent in Dublin.

“The main contributor to the bullish sentiment today was a Spanish bond auction, indicating that despite the turmoil there’s still demand for European government debt,” said London-based Angus Campbell, head of sales at Capital Spreads. “Markets have also been supported by the uptick in German confidence data.”

Spain sold 4.94 billion euros ($6.52 billion) of bills today, more than the maximum target of 4.25 billion euros that the Treasury set for the sale. Borrowing costs fell, while the demand for the 12-month paper increased.

German Investor Sentiment

In Germany, investor confidence unexpectedly rose for the first time in 10 months in December, indicating Europe’s largest economy is weathering the region’s debt crisis.

The ZEW Center for European Economic Research said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, increased to minus 53.8 from a three-year low of minus 55.2 in November. Economists had forecast a drop to minus 55.8.

The FTSE 100 dropped 1.8 percent yesterday after Moody’s Investors Service said it’s reviewing all national credit ratings in the European Union following last week’s debt-crisis summit in Brussels.

BP, Europe’s second-largest oil company, rallied 1.7 percent to 452.25 pence and Shell, the region’s biggest oil company, advanced 2.1 percent to 2,308.5 pence.

Oil surged above $100 a barrel in New York trading amid speculation the Fed may tonight announce a third round of bond purchases, known as quantitative easing.

“There have been a number of rumors floating around the market today,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “There are rumors for further action by the Fed, but where they come from I don’t know.”

U.S. Outlook

Fed Chairman Ben S. Bernanke and his policy-making colleagues will meet tonight to discuss the outlook for the world’s largest economy. Crude also climbed on speculation supplies will be disrupted after a report said Iran will hold military drills to close the Strait of Hormuz.

Petrofac jumped 5.1 percent to 1,443 pence after the U.K. oilfield-services provider said it will beat its profit target in 2011 as it works through a record order backlog. Net income will rise at least 20 percent, more than the 15 percent goal the company set at the start of the year.

Man Group gained 3.2 percent to 134.3 pence, climbing for the first time in six days. The biggest publicly traded hedge fund manager said after the close of trading yesterday that it bought back 1.4 million shares at 131.94 pence apiece.

Whitbread, Go-Ahead Group

Whitbread Plc dropped 3.9 percent to 1,514 pence, its largest decline since March, after the owner of Premier Inn and Costa Coffee shops reported a slowdown in revenue growth as the U.K. hotel market weakened.

Sales at outlets open at least a year rose 2.4 percent in the 13 weeks ended Dec. 1, less than the 3.3 percent growth in the first half. Like-for-like sales at Premier Inn climbed 2.6 percent, compared with 5.2 percent in the first half.

Elsewhere, Go-Ahead Group Plc advanced 7.9 percent to 1,329 pence after the company said that full-year operating profit will be “slightly ahead” of expectations.

Imagination Technologies Group Plc surged 14 percent to 498.5 pence after reporting first-half revenue that topped analysts’ estimates. The company also said it remains confident of “continued good progress” this year and next.

Carpetright Plc jumped 8 percent to 427 pence after the company said it expects improved results in the second half of the year. Analysts at Deutsche Bank AG and Panmure Gordon raised their recommendations for the shares to “hold.”

--With assistance from Mark Shenk in New York. Editors: Andrew Rummer, Srinivasan Sivabalan

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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