Bloomberg News

U.K. Stocks Rise for a Fifth Day as Prudential Advances

March 13, 2012

U.K. stocks rose for a fifth day to an eight-month high as investors turned their attention toward tonight’s Federal Reserve meeting after the euro area’s finance ministers approved a second bailout for Greece.

Prudential Plc climbed after the insurer reported profit that beat analysts’ estimates. Weir Group Plc (WEIR) advanced after the company dropped its bid for Ludowici Ltd. Housebuilders rallied after the British government announced it will underwrite part of the loans to buyers of new properties.

The FTSE 100 Index (UKX) gained 63.16, or 1.1 percent, to 5,955.91 at the close in London, for its highest level since July. The gauge has rallied 6.9 percent this year as the European Central Bank disbursed 1 trillion euros ($1.3 trillion) of loans to the region’s banks. The FTSE All-Share Index jumped 1.1 percent today, while Ireland’s ISEQ Index rallied 1.6 percent.

“The market is very quiet with everyone waiting for the Fed announcement tonight,” said Chris Beauchamp, market analyst at IG Index in London. “There is still a lot of desire to push the market higher, but no one really knows what will be the next real catalyst. Generally with the U.S. economy improving, that remains the main motor.”

The Fed will announce its interest-rate decision after the close of European trading. Economists expect policy makers to refrain from further action to boost growth as the Fed assesses recent data. The Wall Street Journal reported last week that the U.S. central bank is considering a strategy that will allow it to undertake another round of bond buying, while lowering the risk of inflation.

Volume of Shares

The FTSE 100 added 0.1 percent yesterday as a report showing China’s exports trailed economists forecasts limited gains on the benchmark measure. The volume of shares changing hands was 12 percent less than the average over the past 30 days today, data compiled by Bloomberg shows.

Euro-area finance ministers cleared Greece’s second bailout yesterday, enabling the first payment from the 130 billion-euro package to be made this month and concluding months of negotiations between Greece, the International Monetary Fund and the euro area’s authorities.

Prudential (PRU) jumped 4.8 percent to 763 pence after the U.K.’s biggest insurer by market value posted a 7 percent increase in full-year operating profit to 2.07 billion pounds ($3.3 billion) as its Asian business became the largest contributor to earnings for the first time. That topped the 2.02 billion-pound median analyst estimate.

Weir Group, Homebuilders

Weir Group advanced 2.6 percent to 1,992 pence after the world’s biggest maker of pumps for the mining industry dropped its bid for Ludowici after competing with FLSmidth & Co. to buy the Australian company. Weir’s Chief Executive Officer, Keith Cochrane, said a “materially higher offer would not have met the rigorous financial criteria.”

Taylor Wimpey Plc (TW/) led housebuilders higher, rallying 4.3 percent to 52.1 pence after the government said it will help buyers with small cash deposits to buy new homes. Prime Minister David Cameron’s office estimated that the plan will help as many as 100,000 buyers. Credit Suisse Group AG recommended that investors buy shares of housebuilders and increased its earnings-per-share forecast for the industry by 6 percent for 2012 and 14 percent for 2013.

“Only a small fraction” of the 100,000 sales estimated by Cameron’s office are necessary to boost homebuilder earnings, analysts Harry Goad and Arnaud Lehmann wrote in the report.

Persimmon, Bellway Rise

Persimmon Plc (PSN) gained 1.5 percent to 680 pence and Bellway Plc (BWY) climbed 2.5 percent to 846.5 pence.

International Consolidated Airlines Group SA, owner of British Airways and Iberia, climbed 4.4 percent to 170.4 pence as Iberia confirmed that unions have called off strikes due to start on March 16. The airline said an independent mediator will discuss the wage dispute with pilots.

Intertek Group Plc (ITRK) rose 1.6 percent to 2,495 pence after Citigroup Inc. reiterated its buy rating for the company and raised its price estimate for the shares by 27 percent to 2,800 pence.

“We believe this high sector premium is warranted as Intertek offers some of the highest organic growth and return on capital employed in the sector,” analysts wrote in a report dated today.

3I Group, Inchcape

3I Group Plc (III) jumped 6.9 percent to 210 pence, the biggest advance since May 2010. The Guardian newspaper reported that the private-equity firm’s management may buyout the company.

Analysts at Killik & Co. said speculation will continue while the shares trade so far below asset value. The brokerage reiterated its buy rating on the stock.

Inchcape Plc (INCH) surged 11 percent to 418.2 pence after the company reported full-year pretax profit and revenue that beat analysts’ estimates.

Antofagasta Plc (ANTO) fell 2.3 percent to 1,241 pence. The copper producer reported an 18 percent increase in 2011 net income to $1.24 billion, missing the average analyst estimate of $1.26 billion. The dividend fell to 44 cents a share, including a 24- cent special payment, from $1.16 a year earlier.

G4S Plc lost 2.1 percent to 283.5 pence after the company reported full-year profit and sales that missed analysts’ estimates.

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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