Nov. 11 (Bloomberg) -- U.K. stocks advanced to its highest close in three weeks as unemployment rose at a slower pace in 18 months in October and an increase in China’s industrial production boosted raw-material producers.

Rio Tinto Group and BHP Billiton Ltd. rose more than 2.4 percent as metals prices advanced in London. J Sainsbury Plc added 3.2 percent after pretax profit at the U.K.’s second biggest supermarket owner beat estimates.

The benchmark FTSE 100 gained 36.20, or 0.7 percent, to 5,266.75, the highest level since Oct. 19. The gauge has surged 50 percent from the lowest level this year on March 3 amid signs that government stimulus policies and record-low interest rates are helping to drag the global economy out of recession. The FTSE All-Share Index added 0.8 percent today and Ireland’s ISEQ Index was up 0.3 percent at 4:46 p.m.

Chinese “sentiment overnight is really helping boost this market,” said Manus Cranny, markets analyst at MF Global in London. “The metals sector will probably trade a little higher from here as we run into year end,” he told Bloomberg Television.

Claims for jobless benefits in the U.K. increased by 12,900, less than the median forecast for an increase of 20,000. That is the least since April 2008. Former finance minister Kenneth Clarke said yesterday that Bank of England Governor Mervyn King is unlikely to seek interest-rate increases in the next year as the longest recession on record keeps inflation in check.

Declining Sentiment

Investor sentiment in U.K. equities declined for a second month, according to the Bloomberg Professional Confidence Survey conducted from Nov. 2 to Nov. 6. The measure dropped 23 percent to 38.73. This comes as money managers grew more optimistic about U.S. stocks for the first time since August as a record number of companies beat profit estimates and worker productivity, manufacturing and home sales exceeded forecasts.

BHP Billiton, the world’s largest mining company, gained 2.6 percent to 1,816.5 pence. Rio Tinto Group, the third biggest, increased 2.5 percent to 3,118 pence. Copper, lead, and nickel prices rose on the London Metal Exchange.

Gold climbed to a record in London and New York as the dollar fell for a third day, spurring demand for the metal as a hedge against further weakness.

China’s Economy

Production in China, the world’s third-largest economy, rose 16.1 percent from a year earlier, the most since March 2008. The trade surplus almost doubled from September, to $24 billion, as the slide in exports eased to the slowest pace this year, the statistics bureau said in Beijing today.

Sainsbury added 3.2 percent to 338.2 pence. Pretax profit before one-time items rose 19 percent to 307 million pounds, beating the 302 million-pound median estimate of 11 analysts surveyed by Bloomberg.

International Power Plc jumped 2.8 percent to 264.3 pence after saying free cash flow in 2009 will be “significantly ahead” of last year.

Lloyds Banking Group Plc climbed 4.7 percent to 89.25 pence. The lender said it’ increasing an issue of new enhanced capital notes to 7 billion pounds to meet demand.

Great Portland Estates Plc rallied 6.8 percent to 282.5 pence. The property developer reported a narrower loss for the first half after its buildings depreciated more slowly.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

Last Updated: November 11, 2009 11:52 EST