Bloomberg News

U.K. Stocks Are Little Changed; Tullow Oil Climbs

November 02, 2012

The U.K.’s FTSE 100 Index (UKX) closed little changed, following yesterday’s biggest rally for the equity benchmark in a month.

Tullow Oil Plc (TLW) gained 2.7 percent after JPMorgan Chase & Co. recommended investors buy the energy producer. Bumi Plc (BUMI) surged 14 percent after Nathaniel Rothschild was said to form a group to counter a $1.2 billion buyout offer. Royal Bank of Scotland Group Plc (RBS) fell 2.1 percent after posting a loss.

The FTSE 100 rose 6.63 points, or 0.1 percent, to 5,868.55 at the close in London after surging 1.4 percent yesterday. The gauge rose as much as 0.5 percent earlier today after a U.S. jobs report beat economists’ forecasts. The FTSE All-Share Index also added 0.1 percent. Ireland’s ISEQ Index gained 0.9 percent.

“While we did see a rally immediately following the release of the U.S. jobs data, this slowed quite quickly as people began closing their positions before the presidential elections,” said Craig Erlam, a market analyst at Alpari U.K. Ltd. in London. “We’re likely to see a very risk-averse approach to the markets at the start of next week.”

The FTSE 100 has still advanced 1.1 percent this week, extending its advance from its June 1 low to 12 percent, as companies reported better-than-estimated earnings and U.S. manufacturing and private-payrolls reports bolstered confidence in America’s economy.

The last jobs report before the U.S. election on Nov. 6 showed that the world’s largest economy added a net 171,000 workers to payrolls in October. Employers created 148,000 jobs in September, more than was first estimated, today’s Labor Department release showed.

The median forecast of 91 economists surveyed by Bloomberg had called for an advance of 125,000 last month. The unemployment rate rose to 7.9 percent from 7.8 percent.

Trading Volumes

The number of shares changing hands in FTSE 100 companies was 19 percent greater than the 30-day average, according to data compiled by Bloomberg. Volumes were lower than usual for the first two days of this week as Hurricane Sandy shut U.S. equity markets.

Tullow Oil climbed 2.7 percent to 1,445 pence after JPMorgan raised its recommendation for the shares to overweight from neutral, the equivalent of a buy rating.

Bumi surged 14 percent to 283 pence after a person familiar with the matter said that Rothschild will form a group to counter the Bakrie family’s buyout offer for the Indonesian mining company.

Rothschild, who resigned from Bumi’s board last month, has held talks with potential partners and the company’s existing shareholders to fend off the buyout offer, said the person, who requested anonymity because the discussions are private.

RBS Slips

RBS dropped 2.1 percent to 281.3 pence, paring yesterday’s 4.1 percent rally. Britain’s biggest taxpayer-owned lender today reported a 1.38 billion-pound ($2.2 billion) loss in the third quarter after setting aside an additional 400 million pounds to compensate customers who were wrongly sold loan insurance.

That compared with a 1.23 billion-pound profit in the year- earlier period and the median analyst estimate of 276 million pounds, according to a Bloomberg survey.

Today’s provision brings the total RBS has set aside for mis-selling to 1.7 billion pounds.

Admiral Slides

Admiral Group Plc (ADM) posted the biggest decline on the FTSE 100 today, falling 5.3 percent to 1,081 pence after the company, which insures 3.6 million British vehicles, reported a 2 percent drop in third-quarter revenue to 570 million pounds.

“The U.K. car insurance market is cyclical and we are in the softer part of the cycle, with premium rates coming down,” said Henry Engelhardt, Admiral’s CEO. “We believe that the sensible strategy in this part of the cycle is to slow our rate of growth.”

The shares had advanced 4.4 percent over the previous three trading days.

Direct Line Insurance Group Plc (DLG) lost 1.9 percent to 195.25 pence. The U.K.’s biggest home and motor insurer reported a 4 percent drop in operating profit for the third quarter to 123.7 million pounds.

Debenhams Plc (DEB) dropped 3 percent to 120 pence after Bank of America Corp. sold 30 million of the department-store retailer’s shares at 119 pence apiece on behalf of a client, according to a person familiar with the transaction.

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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