Bloomberg News

U.K. Stocks Gain as U.S. Data Boosts Confidence; Vodafone Jumps

January 07, 2012

Jan. 6 (Bloomberg) -- U.K. stocks climbed, snapping a two- day selloff, as a U.S. report showed unemployment fell to a near three-year low, boosting confidence in the recovery of the world’s largest economy.

Vodafone Group Plc, the world’s biggest mobile-phone company, ITV Plc and Carnival Plc all advanced at least 1 percent as analysts recommended the shares. Burberry Plc rose for the first time in three days as a Chinese official said the country will introduce measures to boost consumption.

The benchmark FTSE 100 Index gained 25.42, or 0.5 percent, to 5,649.68 at the close in London, extending this week’s increase to 1.4 percent. The broader FTSE All-Share Index rallied 0.5 percent, while Ireland’s ISEQ Index was unchanged.

“The all important non-farm payrolls figures beat expectations by a wide margin,”said Chris Beauchamp, market analyst at IG Index. “The gain is fairly substantial and adds to the weight of opinion that the U.S. is finally moving down the slipway to prosperity.”

Stocks briefly extended gains today after U.S. payrolls climbed 200,000 last month, exceeding economists’ forecasts. The unemployment rate unexpectedly fell to 8.5 percent, its lowest level since February 2009.

Vodafone added 1.2 percent to 179.5 pence after Goldman Sachs Group Inc. raised its recommendation for the shares to “buy” from “neutral,” saying that earnings and dividend growth at Verizon Wireless will probably boost the company’s free cash flow.

ITV increased 2.7 percent to 71.35 pence after Morgan Stanley upgraded the U.K.’s largest terrestrial commercial broadcaster to “overweight” from “equal weight,” saying the media industry is in “structurally better shape with the long digital de-rating of the early 2000s now largely over.”

Carnival Climbs

Carnival advanced 1 percent to 2,166 pence, climbing for the first time in three days, after Morgan Stanley reiterated its “overweight” recommendation for the world’s largest cruise-ship operator. The analysts reduced their price estimate for the shares to 2,700 pence from 2,800 pence. That’s still 26 percent above yesterday’s closing price.

Burberry, which generates more than 30 percent of its revenue in the Asia-Pacific region, climbed 3.9 percent to 1,250 pence. China’s Commerce Minister Chen Deming said the government is studying measures to boost consumption including the promotion of online shopping and tourism. Chen spoke at the ministry’s annual works conference, according to a statement.

Burberry, the U.K.’s largest luxury goods maker, is scheduled to report third-quarter sales on Jan. 17.

Mitchells & Butlers Jumps

Mitchells & Butlers Plc increased 8.7 percent to 249.8 pence as Morgan Stanley raised its recommendation for the pub owner to “overweight” from “equal weight.”

Man Group Plc dropped the most on the FTSE 100, slumping 8.4 percent to 112.7 pence, after analysts cut their earnings estimates for the hedge-fund manager, citing concern that assets and fees will decline.

RBC Capital Markets downgraded the hedge-fund manager to “sector perform” from “outperform.”

ICAP Plc slid 3 percent to 319.3 pence after UBS AG reiterated its sell recommendation on the interdealer broker, citing a downturn in volumes in December.

--With reporting by Adria Cimino in Paris. Editors: Andrew Rummer, Will Hadfield

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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