FTSE 100 Stocks Advance; BHP Billiton, International Power, BP Shares Gain

U.K. stocks climbed for the first time in five days amid speculation weaker jobs growth in the U.S. will prompt the Federal Reserve to extend efforts to shore up the world’s biggest economy.

Barclays Plc and HSBC Holdings Plc gained more than 1 percent, as banks shares led the benchmark FTSE 100 Index higher. International Power Plc climbed 3.7 percent as two people familiar with the matter said GDF Suez SA, France’s second-largest utility, may take control of the British company with interests in more than 45 power stations.

The FTSE 100 rallied 78.13, or 1.5 percent, to 5,410.52 at the 4:30 p.m. close of trading in London. The FTSE 100 has rallied 13 percent from this year’s low on July 1 as companies reported earnings that topped analysts’ estimates and concern eased that the global economy may be tipping back into recession. The gauge is still 7.1 percent below this year’s high in April. The FTSE All-Share Index advanced 1.3 percent and Ireland’s ISEQ Index gained 1.6 percent today.

“The market has a firm eye on the meeting of the Fed that starts tomorrow,” said Joshua Raymond, a markets strategist at City Index Ltd. in London. Investors “are betting that the Fed could start to inject extra stimulus into the markets to help maintain the U.S. economic recovery.”

Credit Crisis

Three years ago today, the European Central Bank provided an unprecedented 95 billion euros ($126 billion) as the credit crisis made commercial banks unwilling to lend to each other. A worse-than-forecast drop in U.S. nonfarm payrolls reported last week strengthened speculation that the Fed may announce more stimulus measures to boost growth.

Late last week, Goldman Sachs Group Inc. cut its forecast for U.S. economic growth, saying that the Fed may return to “unconventional” monetary easing as early as this week’s policy meeting as the economic recovery continues to lose momentum.

HSBC, the biggest bank in Europe, gained 1.4 percent to 670.7 pence. Barclays climbed 3.2 percent to 335 pence.

International Power gained 3.7 percent to 380 pence. GDF Suez will pay International Power shareholders a special dividend of about 1.3 billion pounds ($2.1 billion) as part of the deal, and GDF will control about two thirds of the enlarged company, said one of the people, who declined to be identified as the talks are private. While the companies are trying to reach a deal before both report earnings on Aug. 10, there’s a chance an agreement won’t be reached, the people said.

Net Inflows

Schroders Plc, Europe’s largest publicly traded fund management company by market value, rallied 4.2 percent to 1,429 pence, the highest level since May 13. BofA Merrill Lynch Global Research increased its price estimate on the shares 26 percent to 1,545 pence after the company last week reported profit and net inflows from investors that rose more than estimated. BP Plc gained 1.7 percent to 432.75 pence for its longest winning streak since before the Deepwater Horizon rig exploded and sank in April. The company said the Macondo well in the Gulf of Mexico is effectively plugged with cement poured last week. BP plans to finish drilling into the base of the well this week so it can pump in mud and cement to permanently plug the source of the world’s biggest offshore accidental oil spill.

Petrofac Ltd. gained 1.2 percent to 1,318 pence as it said it won a $430 million contract from Kuwait Oil Co. to build a water injection project to increase oil recovery. Connaught Plc plummeted 29 percent to 11 pence after the Guardian newspaper reported that the crisis-stricken public- housing maintenance company is in talks with lenders over a potential debt-for-equity exchange.

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

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