Bloomberg News

U.K. Stocks Climb on Greek Agreement, BOE Decision; BG Advances

February 09, 2012

Feb. 9 (Bloomberg) -- U.K. stocks rose, snapping three days of declines, as Greek political leaders struck a deal on austerity measures and the Bank of England raised its asset- purchase target.

BG Group Plc climbed 3.2 percent after saying it plans to sell $5 billion of assets in the next two years. GlaxoSmithKline Plc increased 1.2 percent. Rio Tinto Group fell 1.5 percent after reporting a loss in the second half.

The FTSE 100 Index advanced 19.54, or 0.3 percent, to 5,895.47 at the close in London. The gauge has rallied 19 percent from last year’s lowest level on Oct. 4. The FTSE All- Share Index and Ireland’s ISEQ Index added 0.4 percent each.

BOE policy makers raised the target for bond purchases to 325 billion pounds ($516 billion), more than a quarter of current outstanding gilts, according to a statement in London today. The increase was forecast by 34 of 50 economists in a Bloomberg News survey.

“The market had long been expecting an increase of 50 billion pounds and the Bank of England delivered on that expectation,” said Joshua Raymond, chief market strategist at City Index Ltd. “As much of the increase had already been priced in, the stock market reaction was minimal.”

Greek leaders agreed today on spending cuts that may pave the way for a deal to reduce debt and win a bailout. “Discussions between the Greek government and the troika were successfully completed this morning,” the press office of Prime Minister Lucas Papademos said.

Finance Minister Evangelos Venizelos arrived in Brussels for a meeting of euro-area finance ministers this evening to discuss a 130 billion-euro ($173 billion) rescue and a debt swap that will impose a loss of about 70 percent for investors.

Factory Output

ECB policy makers, at a meeting in Frankfurt today, left the interest rate for the euro area at a record low of 1 percent, as predicted by 55 of 57 economists in a Bloomberg News survey. The bank’s chief Mario Draghi declined to comment today on whether the ECB will use its Greek bonds to reduce the country’s debt.

A report showed that U.K. manufacturing production increased in December more than economists had forecast, led by transport equipment and food. Factory output increased 1 percent from November, when it fell a revised 0.1 percent, the Office for National Statistics said today in London. A separate report showed U.S. jobless claims fell unexpectedly last week.

BG Group climbed 3.2 percent to 1,491.5 pence for the biggest contribution to the FTSE 100’s advance after posting fourth-quarter earnings excluding disposals and one-off items of $1.5 billion, beating analysts’ estimates for profit of $1.1 billion. The U.K.’s third-largest natural-gas producer also said it plans to sell $5 billion of assets to maintain its investment in projects this year and next.

GlaxoSmithKline, SVG

GlaxoSmithKline rose 1.2 percent to 1,409 pence after saying it will be more selective in choosing European countries to introduce new products. The U.K.’s largest drugmaker it isn’t interested in acquisitions in diagnostics, Chief Financial Officer Simon Dingemans said. Roche Holding AG has made a hostile bid for Illumina Inc., a U.S. diagnostics company.

SVG Capital Plc, the biggest backer of private equity firm Permira Advisers LLP, surged 8.4 percent to 257.9 pence after saying the value of its assets increased 11 percent last year as its holdings in companies outperformed stock markets.

Rio Tinto fell 1.5 percent to 3,815 pence for the biggest drag on the FTSE 100. The world’s third-largest mining company swung to a loss after taking a one-time charge of $8.9 billion on the value of its aluminum business.

Tate & Lyle Plc dropped 3.2 percent to 672.5 pence as JPMorgan Chase & Co. and Jefferies Group Inc. reiterated “underperform” ratings after the supplier of caster sugar reported third-quarter earnings in line with its forecasts.

--Editor: Srinivasan Sivabalan

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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


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