Bloomberg News

U.K. Stocks Rise as Smith & Nephew Gains; BG Shares Drop

May 03, 2012

U.K. stocks advanced as Smith & Nephew (SN/) Plc rallied after earnings topped estimates, outweighing worse- than-forecast growth in U.S. service industries.

Smith & Nephew, Europe’s biggest maker of artificial hips and knees, rose 4 percent. BG Group Plc (BG/), the U.K.’s third- largest gas producer, dropped 1.8 percent after reporting an increase in spending. Antofagasta Plc (ANTO) tumbled 4.4 percent as its copper output decreased.

The FTSE 100 Index added 8.44, or 0.2 percent, to 5,766.55 at the close in London, having earlier rallied as much as 0.7 percent. The gauge has gained 3.5 percent in 2012 as investors bet growth in the U.S. and China will outweigh spending cuts in the euro area. The FTSE All-Share Index advanced 0.1 percent today while Ireland’s ISEQ Index lost 0.5 percent.

“Once again it has been poor U.S. data that has scuppered this rally,” Chris Beauchamp, a market analyst at IG Index, wrote in e-mailed comments. “It appears that, as we move towards non-farms tomorrow, the outlook is firmly downbeat.”

Service industries in the U.S. expanded at a slower pace than projected in April, a sign the largest part of the economy may struggle to accelerate in the absence of faster job growth. The Institute for Supply Management’s non-manufacturing index fell to a four-month low of 53.5 from 56 in March, the Tempe, Arizona-based group’s data showed today. The median forecast of 74 economists surveyed by Bloomberg called for a decrease to 55.3. Readings above 50 signal expansion.

U.S. Payrolls

A Labor Department report tomorrow is forecast to show employers added 160,000 workers to payrolls last month after a 120,000 gain in March, according to a Bloomberg survey of economists.

Britain’s services growth also slowed more than economists forecast in April as companies said some customers remained reluctant to spend, data from Markit Economics and the Chartered Institute of Purchasing and Supply showed today.

The FTSE 100 (UKX) pared its advance as European Central Bank President Mario Draghi said policy makers didn’t discuss cutting interest rates at their meeting this week. The ECB held its benchmark rate at a record low of 1 percent, as predicted by all 46 economists in a Bloomberg survey.

Smith & Nephew rose 4 percent to 629.5 pence. First-quarter trading profit, which excludes restructuring and acquisition costs, increased to $252 million from $241 million a year earlier. Earnings on that basis were 19.5 cents a share, exceeding the 19-cent average of eight analyst estimates compiled by Bloomberg.

Burberry Rises

Burberry Group Plc (BRBY), the maker of high-end trench coats and handbags, gained 1.4 percent to 1,536 pence. French rival Hermes International SCA reported first-quarter sales that exceeded analysts’ estimates, easing concern that luxury demand is weakening amid slower economic growth.

James Fisher & Sons Plc (FSJ) jumped 8.3 percent to 590 pence, the biggest increase since March 2009. The U.K. tanker owner and provider of marine services said sales gained more than 20 percent in the first four months of this year.

BG Group dropped 1.8 percent to 1,424.5 pence after saying capital spending increased to $11.5 billion in 2012 from $10.6 billion. BG said its spending plans for 2013 grew to $12 billion from $11.4 billion. The company also reported that net income surged to $1.22 billion in the first quarter from $597 million in the year-earlier period.

Antofagasta declined 4.4 percent to 1,108 pence. The copper producer controlled by Chile’s Luksic family said first-quarter output declined 13 percent from the previous three months because of disruption at its Esperanza mine.

Randgold Retreats

Randgold Resources Ltd. slid 3.7 percent to 5,150 pence as the gold producer that mines two-thirds of its output in Mali said it expects instability to persist in the West African country until elections in a year’s time.

Randgold’s first-quarter net income more than doubled to $89.4 million after output increased and prices gained, the Jersey, Channel Islands-based company said today.

Legal & General Group Plc (LGEN) fell 3.1 percent to 118 pence. The insurer said first-quarter sales were little changed at 434 million pounds ($703 million), compared with 433 million pounds in the same period a year earlier. That missed the 443.5 million-pound estimates of six analysts surveyed by Bloomberg.

To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net; Andrew Rummer in London at arummer@bloomberg.net

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


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