Bloomberg News

U.K. Stocks Climb as China’s GDP Growth Accelerates

January 18, 2013

U.K. stocks climbed, extending the FTSE 100 Index’s highest level since May 2008, as China’s economy accelerated for the first time in two years.

Rio Tinto Group climbed 1.8 percent following the departure of its chief executive officer yesterday. Johnson Matthey (JMAT) Plc and Meggitt Plc (MGGT) rose more than 1 percent as analysts upgraded the shares. Spectris Plc (SXS), the U.K.’s biggest maker of production-testing gear, surged 8.3 percent as sales increased.

The FTSE 100 increased 22.05 points, or 0.4 percent, to 6,154.41 at the close in London, extending this week’s gain to 0.5 percent. The broader FTSE All-Share Index advanced 0.4 percent while Ireland’s ISEQ Index slid 0.2 percent today.

“The gains we have seen so far bode very well for the year ahead,” said James Ferguson, chief strategist at Westhouse Securities Ltd. in London. “China we know is going to have a good year this year because of the change of leadership. They have kept some firepower, and America is generally fixed by all accounts in terms of the housing and debt recovery.”

The FTSE 100 has risen for three straight weeks, bringing its advance so far this year to 4.4 percent, bolstered by better-than-expected U.S and Chinese economic data and an agreement by U.S. lawmakers on a compromise budget to help avoid the so-called fiscal cliff.

China GDP

Today’s data in China showed the world’s second-largest economy expanded 7.9 percent in the fourth quarter from a year earlier, according to the National Bureau of Statistics in Beijing. That compared with the median economist estimate of 7.8 percent in a Bloomberg survey and the 7.4 percent gain in the third quarter.

In the U.K., retail sales unexpectedly fell 0.1 percent in December as consumer uncertainty extended into the key Christmas trading season for British stores, the Office for National Statistics said. The median forecast of 22 economists in a Bloomberg survey was for a 0.2 percent increase.

Rio Tinto climbed 1.8 percent to 3,502.5 pence after the stock jumped 2.7 percent in Sydney trading. The company yesterday announced the departure of its chief executive officer, Tom Albanese, and plans to write down $14 billion for failed deals in aluminum and coal.

“Rio Tinto led the miners higher a day after the departure of its CEO,” said Chris Beauchamp, market analyst at IG. “Investors are looking towards the future with renewed confidence.”

Johnson Upgrade

Johnson Matthey rallied 2.7 percent to 2,317 pence. Goldman Sachs Group Inc. added the company, which makes a third of all auto-catalysts, to its “conviction buy” list, saying most of the company’s near term headwinds including weak autos productions, have been priced into the market.

Meggitt increased 1.4 percent to 437.2 pence, the highest since at least 1988. Barclays upgraded its recommendation for the shares to overweight, the equivalent of buy, from equal weight, saying the world’s largest provider of wheels and brakes for combat aircraft has a diversified and appealing mix of businesses.

CRH Plc (CRH) rose 0.9 percent to 1,250 pence in London as Exane BNP Paribas upgraded the second-biggest maker of construction materials to neutral from underperform. The brokerage cited recent gains in the shares that were less than the wider market, cost cutting and better margins in U.S. asphalt.

Spectris surged 8.3 percent to 2,190 pence, the highest price since at least 1989, after saying fourth-quarter comparable revenue climbed 4 percent. The company also reported 2012 operating profit that was in line with estimates.

International Consolidated Airlines Group (IAG) fell 1.6 percent to 208.4 pence, paring yesterday’s 4.3 percent rally. London’s Heathrow airport, the busiest in Europe, canceled 347 flights and said other services would be delayed as heavy snowfall swept over southern Britain.

IAG’s British Airways, the biggest operator at Heathrow, scrapped flights to airports including Paris Charles de Gaulle, St. Petersburg, Copenhagen and Manchester in northern England.

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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