Bloomberg News

U.K. Stocks Rise to 2008 High as Tullow Oil Advances

February 13, 2013

U.K. stocks climbed for a fourth day, sending the FTSE 100 Index to the highest level in more than 4 1/2 years, as companies from Tullow Oil Plc to Reckitt Benckiser Group Plc rallied after reporting earnings.

Tullow Oil surged the most in 17 months after the oil and gas company also announced better-than-estimated drilling results at a well in Kenya. Reckitt Benckiser rose to its highest price since at least 1988 as the maker of Nurofen painkillers forecast sales will increase. AstraZeneca Plc, BP Plc and Royal Dutch Shell Plc traded without the right to their latest dividends, limiting gains on benchmark gauges.

The FTSE 100 added 20.73 points, or 0.3 percent, to 6,359.11 at the close in London, the highest level since May 2008. The index has risen 7.8 percent this year as U.S. lawmakers struck a budget deal averting spending cuts and tax increases that had threatened to send the world’s largest economy into a recession. The FTSE All-Share Index advanced 0.4 percent today and Ireland’s ISEQ Index jumped 1.6 percent.

“The drivers for the market to head higher remain in place,” Keith Bowman, an equity analyst at Hargreaves Lansdown Plc in London, said in a telephone interview. “Central-bank liquidity is still extremely helpful and the corporate results season has been broadly positive in tone.”

U.K. stocks climbed even as lost dividend rights at AstraZeneca, BP and Shell wiped 17.3 points off the FTSE 100, according to data compiled by Bloomberg.

Inflation Outlook

Bank of England Governor Mervyn King said Britain faces a further bout of inflation and a muted economic recovery. He pledged that officials will support growth where they can.

“Inflation is likely to rise further in the near term and may remain above the 2 percent target for the next two years,” King said as he presented the central bank’s Inflation Report in London today. “The prospect of a further prolonged period of above-target inflation must therefore be considered alongside the weakness of the real economy.”

U.S. President Barack Obama gave his first State of the Union address since re-election late yesterday in Washington, pledging to pursue a trade agreement with the European Union to expand the world’s largest economic relationship. Trade and investment between the U.S. and the 27 nations that make up the EU had a value of $4.5 trillion in 2011.

The volume of shares changing hands on FTSE 100 companies was 15 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

Tullow Oil

Tullow Oil rallied 6.8 percent to 1,260 pence, the biggest jump since September 2011, as the oil explorer reported a 4 percent increase in full-year pretax profit to $1.1 billion and forecast production of 86,000 barrels to 92,000 barrels a day this year.

The company, which will drill as many as 11 wells in Kenya this year, said tests on its Twiga South well flowed oil at 2,351 barrels a day, showing the country’s first commercial flow rates. Bank of America Corp. said analysts had predicted 1,500 barrels a day.

Reckitt Benckiser rose 1.3 percent to 4,419 pence as the company reported that like-for-like sales climbed 6 percent in the fourth quarter, their strongest increase since 2009. The company also said revenue will climb as much as 6 percent at constant exchange rates, excluding the pharmaceuticals unit and the business’s withdrawal from private-label products.

Petrofac Ltd. increased 2 percent to 1,655 pence. UBS AG raised its recommendation for the U.K. oil and gas engineer to buy from neutral, describing the company’s portfolio of projects as profitable and its order intake as strong.

Crest IPO

Crest Nicholson Holdings Ltd. surged 16 percent to 255 pence on the U.K. housebuilder’s first day of trading after its initial public offering.

Vodafone Group Plc, which accounts for 5.3 percent of the FTSE 100 by weighting, fell 1.1 percent to 171.65 pence after a person with knowledge of the matter said the company has considered a bid for Kabel Deutschland Holding AG.

Vodafone hasn’t yet contacted Germany’s largest cable provider, said the person, who asked not to be identified because the plan remains private.

In Ireland, CRH Plc rallied 4.3 percent to 16.46 euros as Davy reiterated its outperform recommendation on the cement maker, citing an improvement in the outlook for U.S. materials and reconstruction efforts from Hurricane Sandy. CRH generates about 45 percent of revenue in the Americas, according to data compiled by Bloomberg.

A gauge of construction shares recorded the biggest gain among 19 industry groups in the Stoxx 600 today.

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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