U.K. Stocks Rise; Friends Provident, Venture Production Advance

U.K. stocks climbed, rebounding from the longest stretch of declines since March, as Friends Provident Plc led a rally by insurers on speculation merger activity may pick up.

Friends Provident jumped 13 percent after rejecting a takeover bid from Resolution Ltd. Venture Production Plc advanced 5.5 percent after investors controlling almost 13 percent of the Scottish natural-gas producer rejected a $1.45 billion offer from Centrica Plc. (CNA)

The benchmark FTSE 100 Index (UKX) added 74.96, or 1.8 percent, to 4,202.13, after dropping as much as 0.8 percent earlier. The FTSE All-Share Index (ASX) rose 1.7 percent and Ireland’s ISEQ Index (ISEQ) increased 1.3 percent.

The FTSE 100 has still slumped 6.8 percent since June 1 amid speculation stock prices have outpaced the outlook for economic growth after a three-month, 28 percent rally pushed valuations to the highest in five years.

“This is now a normal recession and not the doom scenario of last year, said Boris Boehm, board member at Hamburg-based Aramea Asset Management, which oversees about 800 million euros ($1.23 billion). “The market should get back on its recovery.”

Friends Provident surged 13 percent to 68 pence. The 177-year-old U.K. insurer rejected a 1.7 billion-pound takeover approach from Clive Cowdery’s Resolution, saying the bid was too low. Resolution slid 2.8 percent to 87.75 pence.

Venture Production increased 5.5 percent to 828.5 pence. Centrica, the U.K.’s biggest energy supplier, advanced 2.8 percent to 224.25 pence.

British Airways Climbs

Larry Kinch, a founding shareholder of Venture with a 7.4 percent holding, and ArcLight Capital Partners LLC, which with partners controls 5.4 percent, said any bid under 1,000 pence a share undervalued the company. Centrica on July 10 offered 845 pence a share for the outstanding 71 percent of Venture after raising its stake to 29 percent by buying out 3i Group Plc.

British Airways Plc advanced 5.5 percent to 126.6 pence. Chief Executive Officer Willie Walsh has secured backing from some investors for a share sale to boost the company’s finances, the Observer reported, citing an unidentified fund manager.

Separately, the airline is prepared to improve the terms of a proposed merger with Iberia Lineas Aereas de Espana SA, and is willing to consider a 50-50 share swap ratio, El Economista reported today, citing people it didn’t name.

Man Group Gains

Man Group Plc added 4.1 percent to 251.75 pence. The largest publicly traded hedge-fund manager was raised to “neutral” (EMG) from “sell” at UBS AG.

Xstrata Plc slipped 2.4 percent to 583 pence. The company may offer a cash payment to convince Anglo American Plc (AAL) shareholders to consider its merger proposal, the Observer said, citing unidentified people in the City of London. Xstrata spokeswoman Claire Divver declined to comment on the story. Anglo American added 2.7 percent to 1,699 pence.

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

Henderson Group Plc (HGG) added 1.50 pence, or 1.7 percent, to 90.5 pence. The U.K. money manager will tell investors this week it is ready to pursue new acquisitions two months after completing the takeover of New Star Asset Management Group Plc, the London-based Times reported.

JJB Sports Plc (JJB LN) advanced 0.50 pence, or 2.7 percent, to 19.25 pence. Chairman David Jones repaid a 1.5 million-pound personal loan to Mike Ashley, founder of rival U.K. retailer Sports Direct International, the Sunday Telegraph said, citing an interview with Jones.

Qinetiq Group Plc (QQ/) rose 1.5 pence, or 1.1 percent, to 138.5 pence. The military research company split off from the U.K. defense ministry in 2006 reached an agreement on talks with trade union Prospect to avert a pay dispute, the Sunday Telegraph said, citing an e-mail from the union to its members.

Spice Plc (SPI) fell 1.50 pence, or 2.2 percent, to 67.25 pence. The U.K.’s biggest reader of water meters posted increased full-year net income and said it’s confident of future prospects even as the wider economic environment may remain “challenging.”

To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net; Maud van Gaal in Amsterdam at mvangaal@bloomberg.net.

To contact the editor responsible for this story: Daniel Hauck at dhauck1@bloomberg.net.

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