Bloomberg News

Most U.K. Stocks Advance, Led by Rio Tinto; IAG Falls

May 28, 2012

Most U.K. stocks climbed as Greek polls showed increasing support for political parties backing the country’s membership of the euro area, while rising metals prices lifted mining companies.

Rio Tinto (RIO) Group and BHP Billiton Ltd. (BHP) advanced as copper climbed amid dwindling stockpiles in China, and as Citigroup Inc. advised raising holdings in the industry. International Consolidated Airlines Group SA (IAG), owner of British Airways, fell after Spanish shareholder BFA-Bankia sought a bailout from the government.

The FTSE 100 Index added 0.1 percent to 5,356.34 at the 4:30 p.m. close in London. Trading was about half of the daily average volume in the past 30 days, according to Bloomberg data. The FTSE All-Share Index gained 0.2 percent, while Ireland’s ISEQ Index rose 0.7 percent. The U.S., Switzerland, Denmark, Norway and Austria are closed today for national holidays.

“The last week or so has seen a gradual recovery for stock markets and it does feel as if shares in London could grind out a few more gains to the upside over the week,” said David Jones, chief market strategist at IG Index in London. Still, “the reaction to poll results may be seen as a little fickle and we have got used to any positive news quickly getting swamped by the next tranche of disappointment.”

The FTSE 100 (UKX) has lost 10 percent from its 2012 high on March 16 as Greece failed to form a government to deal with its debt payments, and borrowing costs for Spain surged. The gauge posted its first weekly gain in a month last week as China pledged to bolster growth and a three-week selloff left the benchmark at its cheapest valuation since the fourth quarter.

Rescue Fund

The European Union is working on plans to set up a rescue fund for ailing banks, capitalized by levies imposed on the lenders, the Sunday Times reported May 27, without saying where it got the information.

Rio Tinto, the world’s third-biggest mining company, climbed 2.2 percent to 2,857.5 pence. BHP, the largest one, rose 0.8 percent to 1,716.5 pence. Copper climbed for a third day in London as inventories monitored by the Shanghai Futures Exchange slumped for a seventh week, the longest losing streak in a year.

Heath Jansen, Citigroup’s head of research for European metals and mining, wrote in a report today that in the “short term,” his view on the industry changed to “neutral” from “bearish” because of higher-than-average dividend yields offered by the companies.

Antofagasta Plc, a copper miner operating in Chile, rose 2.1 percent to 1,038 pence, its first gain in four days. Xstrata Plc, the largest exporter of coal used by power plants, gained 3 percent to 939.8 pence.

Weir Group Plc (WEIR), the world’s largest provider of pumps to the mining industry, advanced 4 percent to 1,614 pence for the steepest gain in the FTSE 100.

International Consolidated Airlines dropped 2.7 percent to 137.10 pence. BFA-Bankia, a Spanish lender that owns about 12 percent of IAG, is seeking 19 billion euros ($24 billion) of government funds as it struggles with bad loans.

Chairman Jose Ignacio Goirigolzarri said on May 26 that the Spanish bank will give details on stake sales when it presents its strategic plan in June.

Capita Plc (CPI) advanced 3 percent to 629 pence after UBS AG upgraded the supplier of services for the British army to buy from neutral and added the shares to its list of preferred stocks. The shares may climb to 725 pence each, the brokerage wrote in a report.

Rexam Advances

Rexam Plc (REX) rose 2.1 percent to 400.7 pence. The company is close to selling its personal-care unit and may get 350 million pounds ($550 million) for it, the Financial Times reported on May 25, citing unidentified people close to the matter.

Aveva Group Plc (AVV), the maker of computer software, jumped 11 percent to 1,638 pence, the most since October 2008. The company reported annual revenue that topped estimates and proposed a final dividend that was higher than Bloomberg’s forecast.

Aquarius Platinum Ltd. (AQP) jumped 8.7 percent to 74 pence, capping 11 sessions of losses. The mining company said its Mimosa mine in Zimbabwe is unaffected by a restriction on banking services for exporters. By Clementine Fletcher

Resolution Ltd. (RSL) fell 1.4 percent to 199.5 pence. The insurance investment firm is considering a takeover of Rabobank Groep’s Robeco unit, the Sunday Times reported, without saying where it got the information.

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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