Bloomberg News

U.K. Stocks Advance as Euro-Area Finance Ministers Meet

January 21, 2013

U.K. stocks climbed for a third day as Republicans said they would hold a vote on extending the U.S. government’s authority to borrow, while euro-area finance ministers met for the first time this year.

Lonmin Plc (LMI) and Centamin Plc (CEY) led a rally by mining companies as they each gained more than 3 percent. Admiral Group Plc surged the most in three months after Goldman Sachs Group Inc. recommended that investors buy the shares. Pearson Plc dropped 2.9 percent after the publisher said earnings in 2012 will fall short of its previous forecast.

The FTSE 100 (UKX) added 26.57 points, or 0.4 percent, to 6,180.98 at the close in London, for its longest winning streak in a week. The equity benchmark has gained 4.8 percent so far this year as U.S. lawmakers agreed on a compromise budget. The broader FTSE All-Share Index also advanced 0.4 percent today, while Ireland’s ISEQ Index gained 0.1 percent.

“Investors are clearly struggling to discount the forthcoming debt-ceiling negotiations, so the prospect of a further deferral is positive,” said Guy Foster, head of portfolio strategy at Brewin Dolphin Securities Ltd. in London. “The general theme of the U.S. earnings season has also been positive. Beats on the revenue figures are just what the market needed, given the concern about faltering growth.”

Debt Ceiling

In the U.S., House Republicans plan to vote on Jan. 23 on extending the country’s borrowing authority by three months.

“We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government’s spending problem,” Speaker John Boehner said at a private policy retreat for the party near Williamsburg, Virginia, after European markets closed on Jan. 18.

Euro-area finance ministers met in Brussels today to discuss how and when the 500 billion-euro ($666 billion) European Stability Mechanism can bypass governments and provide direct assistance to banks. They will also assess the economies of Spain, Greece and Cyprus.

The U.K.’s financial industry will eliminate 18,000 jobs in the first quarter of the year, the Confederation of British Industry forecast in a report today. Banks, insurers, asset managers and other finance companies probably cut 25,000 positions in the last three months of 2012, according to a study by Britain’s biggest business lobby group and PricewaterhouseCoopers LLP.

Mining Companies

A gauge of mining shares in the FTSE 350 Index increased 1.3 percent. Centamin climbed 4.2 percent to 57.8 pence, while Lonmin, which mines platinum in South Africa, advanced 3.1 percent to 342.9 pence.

Admiral (ADM) surged 4.9 percent to 1,211 pence, its biggest gain since Oct. 16, as Goldman Sachs raised its recommendation on the shares to conviction buy, from neutral. The brokerage said the value of insurance claims may increase at a slower pace than analysts had predicted.

Royal Bank of Scotland Group Plc (RBS) climbed 2.3 percent to 366.9 pence after Sky News reported on its website on Jan. 19 that the lender plans to split its markets and international banking division into separate units. The website did not say where it got the information.

Afren Plc (AFR) gained 2.7 percent to 138.7 pence after saying revenue will probably rise in 2013 as production increases in Iraq’s Kurdistan region. The U.K.-based explorer focused on Nigeria and Iraq said in a statement that sales probably more than doubled to about $1.5 billion last year.

Pearson Drops

Pearson (PSON) declined 2.9 percent to 1,202 pence after the owner of the Financial Times newspaper lowered its earnings projection for 2012 to about 84 pence from a previous estimate of 84.9 pence. The company said in a statement that difficult market conditions will continue into 2013.

Burberry Group Plc (BRBY), the U.K.’s biggest luxury-goods maker, slipped 1.4 percent to 1,367 pence.

The Stoxx 600 Personal & Household Goods Index dropped 0.5 percent today as Cie. Financiere Richemont SA, the world’s second-largest maker of luxury goods, reported third-quarter revenue that missed analysts’ estimates.

The volume of shares changing hands in companies listed on the FTSE 100 was 30 percent lower than the average of the last 30 days, according to data compiled by Bloomberg. U.S. markets are closed today for Martin Luther King Jr. Day.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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