Bloomberg News

U.K. Stocks Climb on Earnings Outlook; RBS, Rockhopper Advance

January 24, 2012

Jan. 23 (Bloomberg) -- U.K. stocks rose for the fifth time in six days amid speculation that current equity valuations aren’t commensurate with the outlook for earnings and as investors awaited details from Greek debt-swap talks.

Royal Bank of Scotland Group Plc advanced 2.6 percent. Rockhopper Exploration Plc jumped 5.5 percent after the Sunday Times reported that Anadarko Petroleum Corp. is considering a takeover of the Falkland Islands explorer. Thomas Cook Group Plc declined 5 percent after the Financial Times reported that travel bookings dropped 33 percent in the first half of January, compared with the same fortnight last year.

The FTSE 100 Index rose 54.01, or 0.9 percent, to 5,782.56 at the close in London. The FTSE-All Share Index also climbed 0.9 percent today, while Ireland’s ISEQ Index was little changed.

“Based on our assessment of the outlook for global economic activity, which shows weakness in the euro area being largely offset by stronger growth in the U.S., we believe the risks to current 2012 profit forecasts are more evenly balanced than implied by current valuations,” said Darren Winder, an equity strategist at Oriel Securities Ltd. in London.

The FTSE 100 has risen 3.8 percent this year, helping to recoup some of the 5.6 percent slide in 2011. This extends the rally from its lowest level last year to 17 percent amid increasing evidence of a strengthening U.S. economy and speculation that euro-area leaders are moving to stem the debt crisis that is curbing growth.

The benchmark gauge is trading at a price-earnings ratio of 10.1, based on forecast profits, according to data compiled by Bloomberg. This compares with an average multiple of 11.3 during the past five years, the data show.

Greek Talks

Bondholders negotiating the Greek debt swap said they’ve made their “maximum” offer, leaving it to the European Union and International Monetary Fund to decide whether to accept the deal, said Charles Dallara, who’s representing private creditors in the talks.

Dallara, managing director of Institute of International Finance, said he’s hopeful the EU and IMF will agree to terms for private-investor involvement in a rescue of Greece to avert a default and collapse of the economy. He declined to elaborate on the terms discussed in talks that resumed Jan. 18 and remained inconclusive. EU finance ministers will meet today.

A deal was struck in October to implement a 50 percent cut in the face value of more than 200 billion euros ($258 billion) of Greek debt by voluntarily exchanging outstanding bonds for new securities. The accord is key to a second financing package for Greece, which faces a 14.5 billion-euro bond payment on March 20.

RBS, Shell

RBS rose 2.6 percent to 28.14 pence.

BP Plc climbed 2 percent to 476.7 pence and Royal Dutch Shell Plc rose 2.5 percent to 2,310 pence. Crude oil prices increased after EU diplomats agreed to place an embargo on the import of Iranian oil with a phase-in period to July 1.

Cable & Wireless Worldwide Plc rallied 34 percent to 23.9 pence.

Rockhopper jumped 5.5 percent to 340.25 pence after the Sunday Times reported that Anadarko Petroleum Corp. is considering a takeover of the Falkland Islands explorer.

Gulf Keystone Petroleum Ltd. rose 1.7 percent to 280 pence after Chief Operating Officer John Gerstenlauer said the Kurdistan Shaikan-4 may be the best well that it has logged to date in the region.

Thomas Cook lost 5 percent to 14.25 pence after the FT report.

Immunodiagnostic Systems Holdings slumped 18 percent to 291.5 pence after saying it forecasts full-year sales below analysts’ estimates.

--Editors: Srinivasan Sivabalan, Andrew Rummer

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus