U.K.'s FTSE 100 Index Rebounds From Seven-Week Low; Kazakhmys, Amec Gain
U.K. stocks rose, with the FTSE 100 Index rebounding from a seven-week low, as mining and oil companies climbed with commodity prices and a U.S. jobs report eased concern about the health of the world’s largest economy.
Kazakhmys Plc, Kazakhstan’s biggest copper producer, and Xstrata Plc gained more than 2 percent. BP Plc, Europe’s second- largest oil company, advanced 2.8 percent. Amec Plc rallied 5.1 percent after the energy engineering company posted a 36 percent jump in first-half profit.
The benchmark FTSE 100 rose 46.44, or 0.9 percent, to 5,155.84 at the 4:30 p.m. close in London. The gauge fell 2.4 percent over the previous two days as data on U.S. durable-goods orders and home sales cast further doubt on an economic rebound. The FTSE All-Share Index gained 0.7 percent today and Ireland’s ISEQ Overall Index rose 0.9 percent.
“Stocks have rebounded sharply today as rising commodities prices dragged the FTSE from the depths of the disappointing data seen in recent days,” said Yusuf Heusen, a London-based senior sales trader at IG Index. Today’s “modest recovery comes as a welcome boost to sentiment.”
Stocks extended gains after applications for jobless benefits in the U.S. fell more than forecast last week, easing concern about a rapid deterioration in the labor market. Initial jobless claims dropped by 31,000, the first decline in a month.
The FTSE 100 is trading at about 10.5 times its companies’ estimated earnings, near the lowest valuation since April 2009, according to data compiled by Bloomberg.
Kazakhmys rose 5.2 percent to 1,129 pence as copper gained for the first time this week in London trading. Xstrata, the world’s biggest exporter of coal for power stations, gained 2.4 percent to 999.7 pence.
Separately, Glencore International AG, the world’s largest commodity trader and majority shareholder in Xstrata, reported a 42 percent jump in first-half profit on rebounding metals demand and prices.
BP, the oil company that’s dropped 36 percent this year after its Deepwater Horizon drilling rig exploded, rallied 2.8 percent to 385.6 pence as oil rose for a second day in New York.
Credit Suisse Group AG reiterated an “outperform” recommendation on the shares and advised investors to “take another look” at the stock because of its low valuation.
Amec climbed 5.1 percent to 891.5 pence after the company reported a 36 percent rise in net income to 88.5 million pounds ($137.6 million) as sales climbed. The order book grew to 3.5 billion pounds at the end of June from 3.2 billion pounds at the end of 2009.
InterContinental Hotels Group Plc gained 1.3 percent to 1,012 pence. France’s Accor SA, Europe’s largest hotelier, posted a narrower first-half loss and forecast full-year operating profit growth of as much as 65 percent as sales rose at its higher-priced lodgings.
Xchanging Plc, a provider of back office services to clients including Lloyds of London, jumped 13 percent to 123.8 pence, rebounding from yesterday’s 11 percent slump. The shares tumbled yesterday after Chief Executive Officer David Andrews said speculation of accounting issues at the company were “incorrect and unfounded.”
Diageo Plc lost 1.5 percent to 1,050 pence after the world’s largest liquor maker reported annual profit growth that failed to top analysts’ estimates on weak sales in the U.S. and Europe. Net income climbed to 1.63 billion pounds compared with the 1.65 billion-pound average estimate of 15 analysts compiled by Bloomberg.
Segro Plc dropped 3.8 percent to 264.6 pence after the Slough, England-based developer reported an increase in vacancies in its industrial properties.
F&C Asset Management Plc, which oversees the oldest U.K. investment fund, retreated 6.1 percent to 58 pence after saying its first-half loss widened to 19.5 million pounds because of costs associated with the acquisition of Thames River Capital LLP. The firm also cut its first-half dividend by 50 percent to 1 penny a share to reduce debt.
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