Bloomberg News

U.K. Stocks Rise Amid Spanish Bailout Speculation

November 13, 2012

U.K. stocks climbed for the first time in five days, erasing losses in the final hour of trading, as Spanish bonds climbed amid speculation the country’s government will ask for a bailout.

ITV Plc (ITV) paced advancing shares, surging 9 percent, after the commercial broadcaster accelerated its cost-saving program. Vodafone (VOD) Group Plc lost 2.5 percent after reporting service revenue that missed analyst estimates. Centrica Plc (CNA) fell 2.8 percent as U.K. regulators probed allegations of price fixing in the wholesale natural-gas market.

The FTSE 100 (UKX) Index gained 18.98 points, or 0.3 percent, to 5,786.25 at the close in London. The gauge earlier fell as much as 1 percent as euro-area finance ministers and the International Monetary Fund disagreed on how Greece will repay its debt. The broader FTSE All-Share Index also added 0.3 percent while Ireland’s ISEQ Index rallied 0.7 percent.

“Rumor of an imminent of Spanish bailout, which is a little flaky, did give the euro some relief against the dollar and got all the European markets off their sessions lows,” Ishaq Siddiqi, a market strategist at ETX Capital in London, said by phone. “In a world of continued uncertainty, rumors in the market can do a lot of work.”

European stocks rebounded as yields on benchmark 10-year Spanish bonds dropped four basis points to 5.85 percent, erasing an earlier advance to the highest level in six weeks. Equities extended gains after German Finance Minister Wolfgang Schaeuble said a plan to combine Greek aid payments into a single package is being considered.

Greek Aid

Stocks initially retreated after euro-area finance ministers at meeting in Brussels delayed until Nov. 20 a decision on how to cover additional Greek needs of as much as 32.6 billion euros ($41 billion). The gathering also left unclear whether the International Monetary Fund will continue to contribute funds.

ITV climbed 9 percent to 94.6 pence after the U.K.’s biggest commercial broadcaster said it will deliver 30 million pounds of cost savings this year, 10 million more than its original target. The company reported a 4 percent increase in nine-month revenue to 1.57 billion pounds and said profit from ITV Studios will exceed 100 million pounds.

TalkTalk Telecom Group Plc (TALK) soared 18 percent to 221 pence, a record high. The British broadband provider spun off from Carphone Warehouse Group Plc reported a 6.2 percent increase in first-half earnings before interest, taxes, depreciation and amortization to 155 million pounds.

In Dublin, Bank of Ireland Plc rose 1.1 percent to 9.4 euro cents after the nation’s largest lender by assets said it’s ready to exit a state guarantee set up for Ireland’s banks four years ago. The lender also said it expects loan losses to decrease further.

Vodafone Sinks

Vodafone sank 2.5 percent to 162.5 pence, the biggest drop since Sept. 4, after the world’s second-largest mobile-phone company reported a 1.4 percent decrease in service sales in the second quarter, the first decline in 10 quarters.

Analysts had projected a 0.7 percent contraction, according to a Bloomberg survey. The company also reported a first-half net loss of 1.98 billion pounds after taking a 5.9 billion-pound writedown in Spain and Italy.

Centrica, the biggest supplier of gas and electricity to U.K. households, dropped 2.8 percent to 310.8 pence and SSE Plc (SSE), the second-largest, fell 0.9 percent to 1,383 pence amid allegations of manipulation in the wholesale natural-gas market.

Gas Probe

The U.K. government today said it’s prepared to clamp down on the market should the price-fixing allegations prove true. The Financial Services Authority said yesterday in a statement that it was investigating claims made last month by price- reporting company ICIS Heren that “unusual trading activity” may have affected gas prices.

Centrica said its traders are “prohibited from providing price information to price reporting agencies” and it has “very robust governance and compliance policies, which regulate its market participation and behavior.”

Anglo American Plc (AAL) slid 3.2 percent to 1,770 pence after the mining company raised the estimated cost of its Minas-Rio iron-ore project in Brazil for at least a fifth time to $8 billion. That compared to an earlier forecast of $5.8 billion.

De La Rue Plc (DLAR) tumbled 5.5 percent to 1,006 pence, the largest drop since January 2011. The world’s biggest printer of banknotes said orders that had been planned for production in the fiscal second half have been delayed.

Mondi Plc, the largest maker of office paper and industrial bags in Europe, fell 2.4 percent to 640 pence as two people familiar with the transaction said Barclays Plc sold 19.3 million shares on behalf of a client at 634 pence apiece.

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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