U.K. Stocks Gain, Erasing Earlier Losses; BSkyB Surges on News Corp. Offer

U.K. stocks rose for a fifth day, the longest stretch of gains in four months, as British Sky Broadcasting Plc received a takeover offer from News Corp., overshadowing a decline in BP shares.

BSkyB, the U.K.’s biggest pay-TV provider, jumped 18 percent as Rupert Murdoch’s News Corp. offered to buy the rest of the company for 7.8 billion pounds ($11.5 billion). ICAP Plc climbed 2.1 percent after Numis Corp. raised its recommendation on the shares. Inmarsat Plc sank 4.6 percent after being downgraded at Bank of America Corp. BP Plc headed for its lowest close since October 2008.

The benchmark FTSE 100 Index added 16.27, or 0.3 percent, to 5,218.4 at 2:37 p.m. in London. The index has fallen 10 percent from this year’s high on April 15 on concern that Europe’s debt crisis will hurt the economic recovery and as BP Plc lost more than a third of its value following an oil spill in the Gulf of Mexico. The FTSE All-Share Index rose 0.4 percent and Ireland’s ISEQ Index increased 0.7 percent today.

The BSkyB offer is “adding to the good feeling today,” said Bill Ismail, a senior sales trader at City Index Ltd. in London. “It’s a boost of confidence. Hopefully a bit more M&A will follow.”

BSkyB Surges

BSkyB soared 18 percent to 712 pence, the biggest gain in more than eight years, after the company rejected an offer of 700 pence a share from News Corp. for the 61 percent stake it doesn’t already own. BSkyB’s independent directors said they may be prepared to accept an offer of more than 800 pence a share.

ICAP advanced 2.1 percent to 426 pence. The world’s largest broker of transactions between banks was raised to “add” from “reduce” at Numis.

Inmarsat, the world’s biggest provider of satellite services to the maritime industry, retreated 4.6 percent to 783.5 pence. The stock was cut to “underperform” from “neutral” at BofA Merrill Lynch.

BP slipped 2.5 percent to 346.7 pence, for a 30 percent drop so far this month. The company’s credit rating was cut to two levels above non-investment grade, or junk, by Fitch Ratings on concern over the potential cost of cleaning up the spill and meeting future liabilities.

The following shares rose or fell in London. Stock symbols are in parentheses.

Bellway Plc (BWY LN) slid 2.3 percent to 620.5 pence, dropping for a third day. The U.K. homebuilder specializing in first-time buyers said sales and visitor levels have declined since last month’s election on uncertainty about government spending plans.

Healthcare Locums Plc (HLO LN) plunged 17 percent to 180.25 pence, the biggest drop since March. The company said that all discussions about a possible takeover offer have ceased.

InterContinental Hotels Group Plc (IHG LN), the world’s largest lodging operator by number of rooms, climbed 2.7 percent to 1,229 pence. The company held two investor days in New York last week and “we were impressed by IHG’s demonstration of expertise in terms of branding and servicing franchisees, which we consider a clear advantage versus peers for future growth,” analysts at Societe Generale Cross Asset Research wrote in a note dated yesterday.

Photo-Me International Plc (PHTM LN) soared 13 percent to 34 pence, the biggest gain since March. The U.K. operator of photo booths said its pretax profit excluding one-time items will exceed current market estimates of about 10.5 million pounds for the year ended April 30 by about 20 percent.

Spice Plc (SPI LN) jumped 7 percent to 53.25 pence, gaining for a second day. Cinven Ltd. confirmed it is considering an offer for Spice and said it made an approach on May 24. Spice rejected the bid of 56 pence a share. Talks are not taking place between the companies, Cinven said.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

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