Bloomberg News

U.K. Stocks Rise as Manufacturing Beats Forecasts

July 10, 2012

U.K. stocks advanced, reversing two days of losses, as manufacturing unexpectedly rose in May and policy makers agreed to disburse the first installment of loans to Spanish banks.

Afren Plc (AFR) gained 9.1 percent after the Daily Mail reported Exxon Mobil Corp. (XOM:US) and Eni SpA (ENI) may bid for the company. Barclays Plc (BARC) added 2.2 percent after Chairman Marcus Agius said the bank’s former chief executive officer will forgo bonuses. WPP Plc (WPP) gained after JPMorgan & Chase Co. upgraded the stock.

The FTSE 100 Index (UKX) rose 36.74, or 0.7 percent, to 5,664.07 at the close of trading in London even after China’s June imports missed estimates. The gauge has rallied 7.7 percent from its 2012 low on June 1 as Greece formed a government and euro- area leaders eased repayment norms for Spanish banks. The broader FTSE All-Share Index gained 0.7 percent today. Ireland’s ISEQ Index climbed 0.6 percent.

“Regional markets have vaulted higher today, shrugging off poor China trade data out overnight,” Ishaq Siddiqi, a market strategist at ETX Capital in London wrote in a note. “Instead, markets have been comforted by better economic data from the U.K. and Italy.

U.K. manufacturing in May surged the most in a year, a report showed. Factory output rose 1.2 percent from April, the Office for National Statistics said. The median forecast of 26 economists in a Bloomberg News survey called for a decline of 0.1 percent.

Overall industrial output increased 1 percent. The statistics office said both May and June data may be distorted by the shifting of a public holiday.

Another report showed Italian industrial production unexpectedly rose in May after declining more than originally reported in the previous month.

Spanish Banks

Euro-area finance ministers agreed to disburse 30 billion euros ($37 billion) by the end of July as part of a 100 billion- euro plan to strengthen Spanish banks. The eventual goal is to use bailout funds to recapitalize the lenders directly instead of saddling the government with the debt.

In China, imports increased 6.3 percent from a year earlier, the customs bureau said in a statement today in Beijing, compared with the 11 percent median estimate in a Bloomberg News survey of 32 economists. Export growth slowed to 11.3 percent and the trade surplus rose to $31.7 billion.

Afren, a U.K.-based oil and gas company focused in Africa, surged 9.1 percent to 114.3 pence, the biggest jump since June 6. Exxon and Eni may bid 2.15 billion pounds in cash, or more than 2 pounds per share, for the company, the Daily Mail reported last night without citing anyone.

Barclays, WPP

Barclays gained 2.2 percent to 167 pence. Agius said the bank’s former Chief Executive Officer Bob Diamond will forgo deferred bonuses valued at as much as 20 million pounds ($31 million) after politicians protested his role in the Libor- fixing scandal. Diamond will receive a total payoff of about 2 million pounds.

WPP Plc, the world’s biggest advertising agency, rose 1.6 percent to 808 pence. The stock was upgraded to overweight, the equivalent of buy, from neutral at JPMorgan Chase & Co.

Centamin Plc (CEY), a gold producer in Egypt, advanced 2.9 percent to 68.4 pence. The company said its production of the precious metal rose 40 percent in the second quarter from the same time last year.

BAE Systems Plc (BA/), Europe’s largest weapons maker, gained 2.7 percent to 305 pence, its highest since March 23. UBS AG said profit growth from the company’s U.K. and international business will offset uncertainty in the U.S.

GlaxoSmithKline Outlook

GlaxoSmithKline Plc dropped 2.8 percent to 1,454 pence after UBS AG downgraded the company’s profit estimates for the second quarter and cut the price target for the share.

Balfour Beatty lost 2.9 percent to 302 pence. The U.K’s biggest builder said the uncertainty over the government’s investment decisions continues and there is an absence of larger, more complex projects. The company said its order book remains strong and the full-year performance will be in line with expectations.

Bwin.Party Digital Entertainment Plc fell 2.6 percent to 105 pence, its third day of declines. The company said there is continuing pressure on its poker operations and its gross win margin in sports betting was lower than expected. Sentiment will continue to be overshadowed by regulatory risk and slow progress in the U.S., the company said.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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


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