Bloomberg News

U.K. Stocks Rebound From Two-Day Drop; ARM, BSkyB Shares Advance

January 31, 2012

Jan. 31 (Bloomberg) -- U.K. stocks rose as most countries in the European Union agreed to tighter budget controls and results from ARM Holdings Plc and British Sky Broadcasting Group Plc reassured investors in the outlook for earnings.

ARM, whose chip designs are used in Apple Inc.’s iPad, added 2 percent as sales and earnings topped analysts’ estimates. BSkyB rose 3.7 percent after posting earnings before interest, taxes and exceptional items that beat estimates.

The benchmark FTSE 100 Index gained 10.52, or 0.2 percent, to 5,681.61 at the close in London, rebounding from two days of losses. The FTSE All-Share Index climbed 0.3 percent, while Ireland’s ISEQ Index increased 0.4 percent.

“The market is moving to a place of thinking that we are in a recovery and because of that the market is willing to take a bit more risk,” said Fredrik Nerbrand, global head of asset allocation at HSBC Holdings Plc in London. He spoke in a Bloomberg Television interview with Owen Thomas.

The FTSE 100 jumped 2 percent this month, extending its rally from last year’s lowest level to 15 percent amid speculation that the euro area will contain it sovereign-debt crisis, China will ease monetary policy and the U.S. economic recovery will strengthen.

EU leaders, meeting in Brussels yesterday, completed a fiscal-discipline treaty that speeds sanctions on high-deficit states, requiring euro countries to anchor balanced-budget rules in national law. Eight countries outside the euro backed the pact, while Britain and the Czech Republic boycotted it.

The policy makers, meeting at the 16th summit in two years, also agreed to bring the region’s permanent bailout fund, the European Stability Mechanism, into operation on July 1, a year ahead of schedule.

Merkel Warns Greece

The meeting ended with German Chancellor Angela Merkel voicing frustration that Athens has failed to overhaul the Greek economy.

“Greece’s debt sustainability is especially bad,” Merkel told reporters. “You have to find a way through more action by the Greek government, more contributions by private creditors, for example, in order to close this gap.”

Greece aims to complete debt-swap talks with bondholders this week. Prime Minister Lucas Papademos told reporters after the summit that he is “strongly committed” to reaching a deal.

U.K. consumer confidence rose to the highest level in seven months in January as slowing inflation eased pressure on shoppers, GfK NOP Ltd. said.

The gauge of sentiment added 4 points from December to minus 29, the strongest reading since June, the London-based research group said in a report today. Consumers’ outlook for the economy and their personal finances also improved.

ARM, BSkyB Climb

ARM increased 2 percent to 609.5 pence after saying that fourth-quarter revenue climbed 21 percent as the company increased the number of licenses sold for smartphones and tablet computers. Earnings per share of 3.7 pence topped estimates of 3 pence.

BSkyB gained 3.7 percent to 690 pence. First-half operating profit rose 16 percent, topping analysts’ estimates, as the U.K.’s biggest commercial broadcaster sold more broadband products to its subscribers. Ebit in the six months ended Dec. 31 increased to 601 million pounds ($947 million), beating analyst’s estimates for 585 million pounds. Sales climbed 6 percent to 3.4 billion pounds.

Ocado Group Plc soared 8.6 percent to 87.1 pence as the U.K.’s largest online grocer predicted that sales growth will approach 20 percent by the end of the year and reported that its annual loss had narrowed.

Dixons Retail Plc slumped 7.5 percent to 14.1 pence as the largest U.K. consumer-electronics retailer said Chief Executive Officer John Browett will leave after four years in charge to become head of retail operations at Apple Inc. in California.

Carpetright Plc tumbled 11 percent to 550 pence after forecasting that full-year underlying pretax profit will be “slightly below” the lower end of current market estimates.

--Editor: Will Hadfield

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


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