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U.K. Stocks Advance; RBS, Imperial Tobacco Increase as Tullow Oil Declines
U.K. stocks climbed, with the benchmark FTSE 100 Index advancing for a third week, as a gain in Royal Bank of Scotland Group Plc and a rally in tobacco and health-care shares offset a slide in Tullow Oil Plc.
RBS, Britain’s biggest government-controlled bank, climbed after Citigroup Inc. advised buying the shares. Imperial Tobacco Group Plc led gains among companies whose earnings are less tied to economic growth. Tullow Oil led falling shares on the FTSE 100 after the Daily Monitor newspaper reported that the oil explorer has had an exploration license withdrawn by the Ugandan government.
The U.K.’s benchmark index rose 7.48, or 0.1 percent, to 5,501.64 at the 4:30 p.m. close in London after swinging between gains and losses at least 18 times, gaining 1.3 percent this week. The gauge has rallied for 10 of the last 11 days as manufacturing data from the U.S. and China helped ease concern that the global economic recovery is faltering. The FTSE All- Share Index added 0.2 percent today and Ireland’s ISEQ Index was unchanged.
“The defensive sectors such as pharmaceuticals and tobacco firms are higher, which suggests that traders are diversifying some of their trading into safer haven asset classes,” said Joshua Raymond, a market strategist at City Index Ltd. in London.
The Basel Committee on Banking Supervision is meeting this weekend to hammer out new rules that may force lenders to boost their capital reserves. The committee has agreed to introduce the rules from January 2013.
RBS, Rightmove Climb
RBS gained 0.8 percent to 48.5 pence. Citigroup upgraded its stance on the shares to “buy” from “hold.”
Imperial Tobacco, the maker of Davidoff cigarettes, climbed 2.1 percent to 1,945 pence, its biggest gain since July.
Rightmove Plc rallied 4.6 percent to 740 pence, the highest price since it first sold shares in 2006, after Axel Springer AG made a bid for the SeLoger.com French real estate portal. Axel Springer, Europe’s largest newspaper publisher, offered 495.7 million euros ($631 million), or 34 euros a share, for the website’s outstanding capital. That values the French real estate website at about 25 times estimated 2010 earnings, according to analyst predictions compiled by Bloomberg. Valued on the same basis, Rightmove’s share price would be almost 900 pence.
Tullow Oil lost 2.3 percent to 1,234 pence. The oil explorer has had an exploration license withdrawn by the Ugandan government, the Daily Monitor reported, citing a letter from Energy Minister Hilary Onek.
JD Wetherspoon Plc, a U.K. chain of 775 pubs, slumped 4.7 percent to 422.5 pence. The company said in a statement that the biggest danger to its industry is the continued increase in taxes and regulation.
“Its concern is understandable,” Execution Noble analyst Alistair Macdonald wrote in a note today. “Our view is that Wetherspoon’s core customer is more likely to cut spending post price increases making it tougher for the company to pass through inflation.” Macdonald is one of 23 analysts tracked by Bloomberg to recommend selling the shares.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
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