U.K. Stocks Rise to Highest Since May as HSBC, BHP Billiton Shares Rally

U.K. stocks surged to the highest level in two and a half months as HSBC Holdings Plc reported profit that beat analysts’ estimates and basic-resources companies tracked metals prices higher.

HSBC led a rally in bank shares after posting pretax profit of $11.1 billion. BHP Billiton Ltd. rose 4.3 percent as copper climbed to a three-month high. Intertek Group Plc, Tullett Prebon Plc and Senior Plc rose more than 5 percent after reporting higher sales.

The benchmark FTSE 100 Index climbed 139.09, or 2.7 percent, to 5,397.11 as of the 4:30 p.m. close of trading in London, the highest level since May 13. The gauge has surged 12 percent from this year’s low July 1 as concern eased that efforts by European governments to curb their budget deficits may derail the economic recovery. The FTSE All-Share Index rose 2.5 percent and Ireland’s ISEQ Index advanced 1.4 percent today.

“We are positive on equities,” Mislav Matejka, the London-based head of European equity strategy at JPMorgan Chase & Co., wrote in a report today. “Earnings remain a support. Most of the leading indicators we follow suggest further growth ahead.”

Stocks extended gains to the highest levels of the day after separate reports showed manufacturing and construction spending in the U.S. exceeded economists’ estimates. Other figures today showed European manufacturing expanded in July by the most in three months.

HSBC, Europe’s largest bank, surged 5.3 percent to 680 pence as pretax profit of $11.1 billion topped analysts’ estimates. Lloyds banking Group Plc, the U.K.’s largest mortgage lender, jumped 4.6 percent to 72.44 pence. Barclays Plc rallied 3.4 percent to 343.95 pence.

Loan Provisions

Bank stocks were among the biggest gainers in Europe. BNP Paribas SA, France’s biggest bank, said second-quarter profit rose 31 percent as bad-loan provisions dropped to the lowest level since before Lehman Brothers Holdings Inc.’s 2008 bankruptcy.

BHP Billiton, the world’s largest mining company, rose 4.3 percent to 2,034.5 pence. Rio Tinto Group, the third-biggest, gained 4.4 percent to 3,450 pence. Lead, nickel, tin and zinc also rose on the London Metal Exchange.

Intertek rallied 6.2 percent to 1,674 pence. The inspection-services company said first-half revenue rose to 652.6 million pounds ($1.03 billion).

Senior advanced 5.1 percent to 134 pence. First-half net income rose 43 percent to 22.3 million pounds, from 15.6 million pounds a year earlier. Revenue climbed to 287.7 million pounds.

Tullett Prebon surged 5.6 percent to 359.5 pence after reporting first-half revenue of 475.8 million pounds. This beat broker Panmure Gordon & Co.’s estimate and the consensus estimate, analyst Vivek Raja wrote in a report to clients today. The broker maintained its “buy” recommendation on the shares.

Hammerson Plc increased 2.7 percent to 398.7 pence. The U.K.’s third-largest real estate investment trust reported a first-half profit after the value of its properties grew.

Xchanging Plc slumped 13 percent to 175 pence, for the biggest decline on the FTSE 250 Index, after the provider of back-office services whose clients include Lloyd’s of London said it will miss an earlier forecast for full-year revenue growth.

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

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