Bloomberg News

U.K. Stocks Rise on U.S. Consumer Confidence; M&S Gains

May 11, 2012

U.K. stocks rose for a second day, erasing an earlier selloff, after a measure of U.S. consumer confidence unexpectedly rose, outweighing declines by banks and mining companies.

Marks & Spencer Group Plc (MKS) rallied 3.5 percent after Bank of America Corp. recommended the U.K. retailer. Hammerson Plc led a rally in real estate companies. Barclays Plc (BARC) dropped more than 2 percent after JPMorgan Chase & Co. (JPM:US) announced a $2 billion trading loss.

The benchmark FTSE 100 Index climbed 0.6 percent to 5,575.52 at the close in London, trimming its weekly drop to 1.4 percent. The FTSE All-Share Index and Ireland’s ISEQ Index both increased 0.6 percent today.

“Morning losses turned into afternoon gains as buyers were once again attracted by equities that have been badly beaten up in recent days,” said Angus Campbell, head of market analysis at Capital Spreads. “Initial losses were reversed following some decent consumer confidence numbers.”

The FTSE 100’s weekly decline has pared its gain for the year to 0.1 percent as investors waited to see whether Greece can form a new government and as Spanish credit risk surged. The U.K. equity gauge has lost 6.5 percent from its 2012 high on March 16.

U.K. stocks pared a slide of as much as 0.8 percent earlier today as Antonis Samaras, the leader of Greece’s biggest political party, said that his sole condition for supporting a coalition government is that it guarantees the country’s membership of the euro area.

U.S. Consumer Confidence

In the U.S., a gauge of consumer confidence rose in May to the highest level in four years. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 77.8 from 76.4 in April. The average estimate of economists surveyed by Bloomberg News had called for a decline to 76.

Marks & Spencer rallied 3.5 percent to 360 pence as Bank of America raised its recommendation for Britain’s largest clothing retailer to buy from neutral, saying they remain “bullish” on general retail. Debenhams Plc (DEB) surged 5 percent to 80.8 pence as Bank of America also upgraded the department-store group’s shares to buy.

Hammerson led a rally in property companies, climbing 3.2 percent to 429.8 pence. British Land Co. gained 2.9 percent to 506 pence and Land Securities Group Plc jumped 2.3 percent to 751 pence.

Catlin Group Ltd. also advanced, rising 0.7 percent to 421.5 pence after reporting a 12 percent increase in sales from a year earlier to $1.6 billion. Analysts at Keefe, Bruyette & Woods and Peel Hunt both upgraded the Lloyd’s of London insurer to buy.

Barclays Shares Fall

Elsewhere, Barclays dropped 2.9 percent to 202.8 pence, following a gauge of European lenders lower as JPMorgan Chief Executive Officer Jamie Dimon announced a $2 billion trading loss because of an “egregious” failure by a unit managing risks. That jeopardized banks’ efforts to relax U.S. restrictions on bets with their own money.

The firm’s chief investment office, run by Ina Drew, 55, took flawed positions on synthetic credit securities that may cost an additional $1 billion this quarter or next, Dimon told analysts yesterday. The losses mounted as JPMorgan tried to mitigate transactions designed to hedge credit exposure.

The bank has also held discussions with the U.K.’s financial regulator over the role of its London employees in the loss, according to two people familiar with the talks.

Vedanta, Kazakhmys Slide

Mining shares also declined with copper amid concern that China’s economy may slow further.

Vedanta lost 2.6 percent to 1,089 pence, Kazakhmys Plc retreated 1.6 percent to 764 pence and Xstrata dropped 3.3 percent to 1,052 pence.

Copper fell in London after a report showed China’s industrial production rose in April at the slowest year-on-year pace since May 2009.

Xstrata’s shares fell even after the Financial Times reported that Qatar Holding, a division of the Qatar Investment Authority, the country’s sovereign-wealth fund, may try to buy a stake of more than 10 percent as part of a plan to invest in Glencore International Plc. The newspaper cited unidentified people familiar with the matter.

The volume of shares changing hands on the FTSE 100 was 16 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

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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