Nov. 4 (Bloomberg) -- U.K. stocks rebounded from a one- month low, led by a rally in retailers after Marks & Spencer Group Plc posted better-than-expected earnings and Next Plc raised its year-end forecast.

Marks & Spencer rose the most since April as Britain’s largest clothing retailer also said it made a “good start” to the third quarter. Next, the second-biggest, jumped to a two- year high. Aviva Plc led gains in insurers, climbing 5.5 percent, as profitability improved in the company’s biggest life insurance and pensions market.

The benchmark FTSE 100 Index increased 70.68, or 1.4 percent, to 5,107.89, recovering all of yesterday’s 1.3 percent retreat. The FTSE All-Share Index added 1.6 percent, while Ireland’s ISEQ Index increased 4 percent as Bank of Ireland Plc surged in Dublin.

“M&S and Next have come in at the higher end of expectations and both have been rewarded with a spike in the share price,” said London-based Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers. The retailers “have pleasantly surprised expectations and are a contribution to a slowly improving overall picture.”

The FTSE 100, which last week capped its worst weekly sell- off since an eight-month rally started in March, has still surged more than 45 percent as companies reported higher profits and investors speculated the worst recession since World War II may be easing.

A report today showed consumer confidence in the U.K. remained at 1 1/2 years high last month as house prices recovered. An index of sentiment was at 72 in October, the same as in September, Nationwide Building Society said.

Marks & Spencer Jumps

Marks & Spencer jumped 6 percent to 361.5 pence after reporting first-half profit of 224.3 million pounds ($369.4 million). That beat the 201 million-pound median estimate of 12 analysts surveyed by Bloomberg.

Next increased 5.6 percent to 1,912 pence, the highest price since November 2007. The retailer raised its forecast for the year-end holiday trading period after third-quarter sales beat estimates driven by new ranges of women’s clothing.

Debenhams Plc, Britain’s second-largest department-store chain, added 6 percent to 80.9 pence. Burberry Group Plc, the biggest U.K. luxury goods maker, rose 5.1 percent to 561 pence.

Aviva rallied 5.5 percent to 400.3 pence, the steepest advance since July. The U.K.’s second-biggest insurer said profit margins on new life and pension products sold in the U.K. improved to 2.5 percent at the end of September, compared with 2.1 percent at June 30.

Bank of Ireland

“The outlook for the group’s total profitability in 2009 is good despite a reduction in sales driven by continuing customer caution and active management of sales volumes,” Chief Executive Officer Andrew Moss said in the statement.

Bank of Ireland jumped 25 percent to 1.75 euros, rebounding from yesterday’s 12 percent drop. The bank maintained its forecast for loan losses in the three years through March 2011 and said the pace of economic decline may be easing.

Separately, Irish Finance Minister Brian Lenihan said the government is willing to put more capital into the country’s banks if needed.

The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.

Liberty International Plc (LII LN) increased 11.3 pence, or 2.6 percent, to 443.9. The U.K.’s largest owner of shopping centers said the number of retailers failing slowed “significantly” in the third quarter as the longest U.K. recession in more than 50 years eased.

Taylor Wimpey Plc (TW/ LN) rose 3.03 pence, or 8.2 percent, to 40. The U.K.’s largest homebuilder by market value said the average price of homes on order climbed 9 percent from the first half as the market continues to be “significantly better” than last year.

Thomas Cook Group Plc (TCG LN) jumped 14.3 pence, or 7.4 percent, to 207.4. Europe’s second-biggest tour operator was upgraded to “buy” from “hold” at Collins Stewart Plc.

J.D. Wetherspoon Plc (JDW LN) advanced 12.7 pence, or 2.7 percent, to 477.7. The owner of more than 700 U.K. pubs said first-quarter revenue rose 4.5 percent as customers sought discount meals. Enterprise Inns Plc (ETI LN), the U.K.’s second- largest pub owner, increased 6.4 pence, or 5.5 percent, to 123.9. Punch Taverns Plc (PUB LN), the biggest, rallied 6.3 pence, or 7.7 percent, to 88.

To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net.

Last Updated: November 4, 2009 12:14 EST