Bloomberg News

U.K. Stocks Rise as FTSE 100 Index Snaps Three-Day Drop

May 10, 2012

U.K. stocks advanced, with the benchmark FTSE 100 Index (UKX) snapping three days of losses, led by a rebound in mining companies and banks.

Kazakhmys Plc (KAZ) paced commodity stocks higher amid speculation that China will take steps to boost economic growth. Reckitt Benckiser Group Plc (RB/) tumbled 3.5 percent after shareholder JAB Holdings BV sold a stake at a discount.

The benchmark FTSE 100 Index added 0.3 percent to 5,543.95 at the close in London, after falling yesterday at the lowest level since December. The FTSE All-Share Index rose 0.4 percent today, while Ireland’s ISEQ Index gained 0.6 percent.

“Investor sentiment towards stocks improved slightly today as bargain hunters emerged from the sidelines,” said Angus Campbell, head of market analysis at Capital Spreads. “European indices have suffered such big losses in the past few days that it was inevitable that a rally would ensue.”

The FTSE 100 fell for a third day yesterday as investors awaited a resolution to the political impasse in Greece and as Spanish credit risk surged. The gauge has erased all of its gains this year amid renewed concern policy makers in the euro region are struggling to contain the debt crisis.

Bank of England officials today halted stimulus expansion after seven months of bond purchases as the threat of inflation trumped concerns about the economy.

The nine-member Monetary Policy Committee led by Governor Mervyn King held its quantitative easing target at 325 billion pounds ($525 billion), a move forecast by the majority of economists in a Bloomberg News survey. Officials also left the benchmark interest rate at a record low of 0.5 percent.

Kazakhmys, ARM Holdings

Kazakhmys rose 2.2 percent to 776 pence, Vedanta Resources Plc increased 2.7 percent to 1,118 pence and Rio Tinto Group gained 0.7 percent to 3,149.5 pence.

Copper advanced for the first time in six days on speculation China may take steps to spur expansion after data showed imports and exports rose less than economists estimated and inbound shipments of the metal dropped last month.

“We expect Beijing to step up easing measures in the coming months, including additional quantitative monetary easing via open market operation and a reserve-ratio requirement cut in the coming weeks, if not days,” HSBC Holdings Plc economists Sun Junwei and Qu Hongbin wrote in a report after the Chinese data.

Lloyds Banking Group jumped 4.3 percent to 31.2 pence, rebounding from yesterday’s biggest two-day selloff since November. Barclays Plc rallied 3.2 percent to 208.8 pence, snapping a five-day selloff, and Royal Bank of Scotland Group Plc advanced 1.9 percent to 23.05 pence.

ARM Holdings Plc (ARM) jumped 4.1 percent to 507.5 pence after Sanford C. Bernstein & Co. upgraded the chip designer’s shares to market perform, the equivalent of a neutral recommendation. Seymour Pierce also initiated coverage with a buy rating.

“ARM appears set to extend its leading positions in the mobile phone and data storage markets across other consumer electronics and low power applications,” Seymour Pierce analyst Ian Robertson wrote in a report.

Old Mutual Assets

Old Mutual Plc (OML) rose 4 percent to 149.7 pence after the financial-services provider said funds under management rose 6 percent to 284.2 billion pounds in the three months through March.

Trinity Mirror Plc (TNI) rallied 12 percent to 33.75 pence, the most since August. The publisher of the U.K.’s Daily Mirror tabloid gave an “encouraging” first-quarter trading update, according to Barclays Plc, which said that advertising revenue in March and April didn’t deteriorate.

Reckitt lost 3.5 percent to 3,440 pence. JAB sold 36 million Reckitt shares, or a 4.9 percent stake, for 3,350 pence apiece, according to Bank of America Corp. who managed the deal. That’s 6 percent less than yesterday’s closing price.

JAB, the U.K. company’s largest shareholder, said it doesn’t plan to sell a further stake in the maker of Dettol handwash for at least one year.

Experian Plc (EXPN) fell 4.3 percent to 910 pence after the credit-checking company reported a rising tax rate and as the company agreed to sell its price comparison shopping unit PriceGrabber to Ybrant Digital Ltd. for $175 million. Analysts at Jefferies Group Inc. said the loss on the sale of the unit may cut earnings per share by 1 percent to 3 percent in 2013.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

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


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