U.K. stocks rose to their highest level in four months, as mining companies advanced and investors speculated that global central banks will introduce measures to stimulate economic growth.
Xstrata Plc (XTA) advanced 1.6 percent after reporting first-half net income that beat analysts’ estimates. Evraz Plc (EVR) posted the biggest gain on the benchmark FTSE 100 Index, surging 10 percent. Standard Chartered plummeted 16 percent, its biggest drop in 24 years, as a New York regulator warned that it may suspend the bank’s U.S. unit from doing business in the state.
The FTSE 100 increased 32.47 points, or 0.6 percent, to 5,841.24 at the close in London, its highest since April 2. The equity benchmark has climbed 11 percent from its 2012 low on June 1 as European Central Bank President Mario Draghi pledged to preserve the euro. The broader FTSE All-Share Index added 0.5 percent today, while Ireland’s ISEQ Index retreated 1 percent.
“The troubles of Standard Chartered aside, today has had little action of note,” said Chris Beauchamp, market analyst at IG Index in London. “Expectations of coming central bank action continue to hold markets up.”
In the U.S., Federal Reserve Bank of Boston President Eric Rosengren said the central bank should pursue a quantitative easing program of “substantial magnitude” to stimulate growth and hiring amid a global slowdown. The Fed should base its guidance on the economic outcomes it seeks and focus on buying more mortgage-backed securities, Rosengren said on CNBC.
U.K. industrial production fell 2.5 percent in June, according to a report from the Office for National Statistics. That was narrower than the 3.5 percent decline that economists had forecast. The ONS said the impact of today’s report is a 0.07 percentage point upward revision to the published figures for the U.K.’s second-quarter gross domestic product.
Xstrata gained 1.6 percent to 896.9 pence after the company posted first-half net income of $1.94 billion. That exceeded the average analyst estimate of $1.49 billion in a Bloomberg News survey.
Evraz jumped 10 percent to 276.9 pence, while Glencore International Plc (GLEN) added 2.4 percent to 336.6 pence. Vedanta Resources Plc climbed 2.4 percent to 1,007 pence. A gauge of U.K. mining companies increased 1.9 percent.
BP Plc (BP/), Europe’s second-biggest oil producer, climbed 2.9 percent to 453.8 pence as oil rose for a third day in New York.
InterContinental Hotels Group Plc (IHG) surged 6.4 percent to 1,725 pence. The world’s largest provider of hotel rooms reported a 6 percent gain in first-half operating profit and said it will return $1 billion to shareholders through a special dividend and a share buyback.
Standard Chartered plunged 16 percent to 1,228.5 pence, its biggest slide since at least September 1988. Analysts at brokerages from Nomura Holdings Inc. to Bank of America Corp. downgraded the lenders’ shares.
New York’s Department of Financial Services said yesterday that Standard Chartered conducted $250 billion of transactions with Iranian banks over seven years. That violated federal money-laundering laws, the regulator said.
“It’s bad news for banks once again, as the daggers are out for Standard Chartered, with the U.S. regulators flexing their muscles,” said Simon Denham, managing director of Capital Spreads in London. “It is yet another chapter in a very long book of the banking sector’s woes.”
Elan Corp. tumbled 8.7 percent to 8.43 euros in Dublin trading. The Irish drugmaker said that it will take a charge of $117.3 million this quarter after it wrote down to zero the value of its venture with Johnson & Johnson to develop an Alzheimer’s treatment. The drug, bapineuzumab, failed for a second time in a clinical trial.
The volume of shares changing hands on the FTSE 100 (UKX) was 3.8 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
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