Bloomberg News

U.K. Stocks Advance for First Day in Three; Rio Tinto Climbs

December 20, 2011

Dec. 20 (Bloomberg) -- U.K. stocks advanced after better- than-estimated data on housing starts in the world’s largest economy and as reports showed gains in British consumer confidence and German business sentiment.

Rio Tinto Group contributed the most to an increase in commodity companies as metals prices climbed. Aggreko Plc, the world’s largest provider of mobile power-supplies, rose 6.6 percent as Citigroup Inc. recommended the shares. AstraZeneca Plc, the U.K.’s second-largest drugmaker, fell the most in a month after predicting full-year earnings in the lower half of its forecast range.

The benchmark FTSE 100 Index advanced 54.61, or 1 percent, to 5,419.6 at the close in London, rebounding from an earlier decline of as much as 0.7 percent. The broader FTSE All-Share Index also gained 1 percent and Ireland’s ISEQ Index advanced 1.4 percent.

“Are we finally hearing the jingling sleigh bells of the much-hoped for Santa rally?” Chris Beauchamp, a market analyst at IG Markets in London, wrote in an e-mail. “U.S. housing figures came in above expectations, showing good growth for this long-dormant market.”

In the U.S., a Commerce Department report today showed that builders began work on the most houses in more than a year in November. Starts increased 9.3 percent to a 685,000 annual rate, topping the highest estimate of economists surveyed by Bloomberg News. Building permits, a proxy for future construction, also climbed to a more than one-year high.

Consumer Confidence

In the U.K., consumer confidence rose in November from a record low as Britons’ expectations for the economy improved in the run-up to Christmas, Nationwide Building Society said.

German business confidence unexpectedly rose for a second month in December, suggesting Europe’s largest economy is weathering the euro area’s debt crisis. The Ifo institute’s business climate index, based on a survey of 7,000 executives, rose to 107.2 from 106.6 in November, the Munich-based institute said. Economists had predicted a drop to 106, the median of 36 forecasts in a Bloomberg News survey showed.

European Central Bank President Mario Draghi said yesterday that substantial risks to the economy remain and the law forbids him from increasing government-bond purchases to fight the crisis.

Rio Tinto added 2.3 percent to 3,096 pence. Kazakhmys Plc climbed 4.2 percent to 886.5 pence. Randgold Resources Ltd. increased 3.2 percent to 6,700 pence. Gold, copper and nickel all rallied in London.

Aggreko Advances

Aggreko gained 6.6 percent to 1,970 pence as Citigroup recommended buying the shares, citing “impressive local business momentum.”

AstraZeneca slid 1.5 percent to 2,905 pence, its biggest drop since Nov. 21, as the drugmaker said core earnings per share for the year will probably be “in the lower half” of its $7.20 to $7.40 forecast.

The company will take a charge of $381.5 million in the fourth quarter after two experimental medicines had disappointing results, London-based AstraZeneca said.

SVG Capital Plc surged 21 percent to 200 pence. The biggest backer of private-equity firm Permira Advisers LLP said it will return 170 million pounds ($267 million) to shareholders and will widen its range of investments to include other buyout firms.

WSP Group Plc, an engineering company, soared 26 percent to 202 pence after saying trading for the year will be in line with forecasts and signing a new banking facility.

A bid for WSP “from a major international consultancy remains a possibility,” Michael Parkinson, an analyst at Brewin Dolphin Holdings Plc, said.

--Editors: Andrew Rummer, Will Hadfield

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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


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