Bloomberg News

U.K. Stocks Climb as U.S. Votes for President

November 06, 2012

U.K. stocks advanced for the third time in four days, led by a rally in financial companies, as Americans went to the polls to elect their president.

Resolution (RSL) Plc jumped 7 percent as Bank of America Corp. upgraded the insurance-buyout firm. ARM Holdings Plc (ARM) gained 2.1 percent after Apple Inc. was said to be exploring how to use chip designs from its iPad and iPhone in Mac computers. Marks & Spencer Group Plc (MKS) rose 2.8 percent after reporting earnings.

The FTSE 100 Index (UKX) added 0.8 percent to 5,884.9 at the close in London. The equity benchmark slid 0.5 percent yesterday amid concern that Greece will struggle to obtain more aid and as HSBC Holdings Plc’s earnings missed estimates. The broader FTSE All-Share Index increased 0.7 percent, while Ireland’s ISEQ Index rose 0.4 percent.

“Stock markets are higher in Europe, but there is an element of caution ahead of the presidential election tonight,” said James Hughes, chief market analyst at Alpari U.K. Ltd. in London. “The election is at the forefront of people’s minds.”

U.S. voters will decide today between giving President Barack Obama a second term in office or replacing him with Republican challenger Mitt Romney.

Obama led Romney 48 percent to 45 percent in a national poll conducted by the Pew Research Center from Oct. 31 to Nov. 3 and released on Nov. 4. The survey of 2,709 likely voters has a margin of error of 2.2 percentage points.

Greek Vote

In Greece, lawmakers will vote as early as tomorrow on a bill of austerity measures that the country must introduce before obtaining further aid from the European Union.

Also this week, the Bank of England and the European Central Bank will both leave their key interest rates unchanged, according to Bloomberg surveys of economists. China’s President Hu Jintao will probably hand over the Communist Party leadership to Vice President Xi Jinping at a congress starting on Nov. 8.

The volume of shares changing hands in companies on the FTSE 100 was 6.6 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

Resolution surged 7 percent to 236.6 pence after Bank of America raised its recommendation for the shares to buy from neutral, citing the insurer’s valuation and estimates for its future dividend payments.

A gauge of insurance companies climbed 1.7 percent, advancing for the first time in three days. Standard Life Plc (SL/) rose 1.8 percent to 303.4 pence, Aviva Plc (AV/) gained 1.8 percent to 339.6 pence and Legal & General Group Plc (LGEN) added 2.8 percent to 144.2 pence.

ARM Rallies

ARM Holdings added 2.1 percent to 709.5 pence after three people familiar with Apple (AAPL:US)’s research said that the chip technology used for its mobile devices will have enough power to run its desktops and laptops. Apple has used processors from Intel Corp. for its personal computers since 2005. The world’s most valuable business uses ARM’s chip designs for its iPhones.

Marks & Spencer climbed 2.8 percent to 398.7 pence after the U.K.’s largest clothing retailer reported first-half underlying pretax profit of 296.8 million pounds ($474 million). That was more than the median estimate of 280 million pounds from 13 analysts surveyed by Bloomberg.

The company also forecast an increase in profitability for the year with gross margins “towards the top end” of a range from unchanged to a 0.25 percentage point increase.

InterContinental, Babcock

InterContinental Hotels Group Plc (IHG) gained 1.4 percent to 1,545 pence after the owner of the Holiday Inn chain said third- quarter operating profit climbed 9 percent to $167 million. That beat the $164.6 million average estimate of five analysts in a Bloomberg survey.

International Consolidated Airlines Group SA (IAG) paced a rally in European carriers today, climbing 2.5 percent to 175 pence. The parent company of British Airways reported a 3.2 percent increase in passenger traffic for October.

In Dublin, Aer Lingus (AERL) Group Plc gained 2.4 percent to 1.11 euros. The carrier today reported a 10 percent jump in long-haul passenger numbers last month and a 35 percent surge for regional flights. Overall passenger numbers increased 0.9 percent for the month.

Ryanair Holdings Plc, which yesterday raised its earnings outlook, climbed 1.2 percent to 4.88 euros, extending its advance so far this week to 7.3 percent. The discount airline today reported a 4 percent increase in passenger traffic for October.

BowLeven, Babcock

BowLeven Plc, an oil explorer focusing on Cameroon, surged 7.7 percent to 80.5 pence in London after Petrofac Ltd. agreed to help the company to invest as much as $500 million to develop a permit in the central African nation.

Babcock International Group Plc (BAB) lost 3.5 percent to 954.5 pence, paring last week’s 4.1 percent advance, after the engineering company reported a 3.8 percent decline in its order backlog in the first half as contract awards slowed.

Morgan Sindall Group Plc (MGNS) sank 5.4 percent to 625 pence after Paul Smith resigned as chief executive officer and the construction company said full-year trading will be worse than forecast because the market has deteriorated since the first half. Executive chairman, John Morgan, replaced Smith as CEO.

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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