Bloomberg News

U.K. Stocks Climb Amid Pledges on Euro; Barclays Rallies

July 27, 2012

U.K. stocks rose to a one-week high, led by a rally in banks, as European leaders pledged to protect the euro and U.S. economic growth exceeded forecasts.

Barclays Plc climbed 8.7 percent, the most in six months, after reporting better-than-estimated earnings. Royal Bank of Scotland Group Plc and Lloyds (LLOY) Banking Group Plc also advanced. Anglo American (AAL) Plc and Pearson Plc (PSON) paced declining shares after they reported declines in profit.

The FTSE 100 (UKX) Index added 54.05 points, or 1 percent, to 5,627.21 at the close in London, paring the weekly declined to 0.4 percent. The gauge jumped 1.4 percent yesterday after European Central Bank President Mario Draghi said policy makers will do whatever it takes to preserve the euro and act on surging bond yields. The broader FTSE All-Share Index climbed 1 percent today, while Ireland’s ISEQ Index rose 0.8 percent.

“More rhetoric out of Europe from the leaders of France and Germany boosted confidence today,” said Angus Campbell, head of market analysis at Capital Spreads in London. “Even though market expectations of a euro break up in some shape or form have increased, investors were willing to buy equities.”

Stocks rallied as German Chancellor Angela Merkel and French President Francois Hollande said their countries are “bound by the deepest duty” to keep the euro area intact and that they will do “everything” necessary to protect the single currency.

Fulfill Commitments

In a joint statement made after a telephone conference today, Merkel and Hollande added that the 17 members of the euro as well as institutions must fulfill their commitments “within their own areas of competence.”

Spanish and Italian bonds surged for a third day amid speculation policy makers will sanction purchases of government debt to ease the debt crisis. Italy’s 10-year yields fell below 6 percent for the first time in a week after Le Monde, a French newspaper, reported that the ECB is preparing to buy securities in the secondary market, followed by primary-market purchases from the region’s bailout funds.

The U.S. economy, thew world’s largest, expanded at a 1.5 percent annual rate in the second quarter after a revised 2 percent gain in the prior period, Commerce Department data showed today. The median forecast of 82 economists surveyed by Bloomberg News called for a 1.4 percent increase.

Barclays Jumps

Barclays (BARC), the U.K.’s second-biggest lender by assets, rallied 8.7 percent to 167 pence. The lender, which is searching for a new management team in the wake of the Libor scandal, reported a 13 percent increase in first-half pretax profit excluding debt-valuation adjustments and other one-time items to 4.2 billion pounds ($6.6 billion). That beat the 3.9 billion- pound median analyst estimate in a Bloomberg survey.

The shares climbed even as the bank disclosed that U.K. regulators are investigating four current and former senior employees, including Finance Director Chris Lucas, over the disclosure of fees related to a fundraising in 2008.

RBS climbed 3.2 percent to 214.5 pence, Lloyds increased 3.7 percent to 30.21 pence and Standard Chartered Plc (STAN) rose 1.8 percent to 1,493 pence.

UBM Plc (UBM) gained 7.5 percent to 652.5 pence after the publisher of InformationWeek said it may sell its data services division to invest in businesses with better returns. First-half net income climbed 11 percent from a year earlier to 55.5 million pounds.

William Hill Plc (WMH) surged 7.1 percent to 311.1 pence, the highest since January 2008. The U.K. bookmaker reported first- half pretax profit and revenue that exceeded estimates.

Anglo American

Anglo American slid 3.6 percent to 1,894 pence, the lowest price since October 2009, after the mining company said first- half earnings tumbled 46 percent, more than analysts expected, as commodity prices declined.

Anglo also said its Minas-Rio iron-ore project in Brazil will probably start shipping ore in the second half of 2014, a year later than planned. The company, which in December said the cost may rise to $5.8 billion, is assessing the effect of the delay on spending.

Pearson declined 5 percent to 1,230 pence after the owner of the Financial Times said first-half operating profit shrank 9.6 percent to 188 million pounds.

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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