U.K. Stocks Advance; EasyJet, Xstrata Rise as Autonomy Plummets in London
Stock Chart for Xstrata Ltd (XTA)
U.K. stocks climbed to a five-month high as EasyJet Plc said full-year profit beat its forecast and speculation mounted that central banks may follow Japan’s move this week to provide more aid to stimulate the economy.
EasyJet, Europe’s second-biggest discount airline, rallied 12 percent. Anglo American Plc and Xstrata Plc led raw-material shares higher as metals prices rose. Autonomy Corp., the U.K.’s second-largest software company, slumped the most in eight years after cutting its revenue forecast.
The benchmark FTSE 100 Index rose 45.63, or 0.8 percent, to 5,681.39 at the 4:30 p.m. close in London, its highest level since April 26. The measure has rallied 18 percent since this year’s low in July as investors bet that central banks will step in to shore up economic growth as the recovery falters. The FTSE All-Share Index also gained 0.8 percent today, while Ireland’s ISEQ Index rallied 1.2 percent.
“On one side you see central banks are trying to put a floor in by printing money and buying back bonds,” Adrian van Tiggelen, chief strategist at ING Investment Management in The Hague, said in an interview on Bloomberg Television’s “Countdown” with Maryam Nemazee. “On the other side you’re seeing companies, certainly in the U.S., buying back more stock than issuing stock and that’s also a source of liquidity. Both give support.”
EasyJet rallied 12 percent to 433.3 pence, the largest gain since January 2009. The airline said pretax profit for the year ended Sept. 30 was “slightly ahead” of a 150 million-pound ($239 million) top-end forecast issued on May 11 after it served more travelers in September and as the impact of the Icelandic volcanic ash cloud in April was less than anticipated.
“As a result of strong revenue performance, we have increased our forecasts” for EasyJet, Panmure Gordon & Co. analyst Gert Zonneveld wrote in a report today. He maintained his “buy” recommendation on the shares.
British Airways Plc rose 4.5 percent to 266.1 pence, extending yesterday’s 6.5 percent gain. Chief Executive Officer Willie Walsh said he sees no evidence to support concern about a double-dip recession and that demand has “improved” from a year ago, albeit from a “very low base.”
Ryanair Holdings Plc advanced 1.4 percent to 4.07 euros.
Anglo American climbed 4.2 percent to 2,752 pence. Xstrata rose 3.8 percent to 1,286.5 pence. Copper, lead, nickel and tin increased on the London Metal Exchange.
Autonomy plummeted 16 percent to 1,551 pence. The software company lowered its forecast for full-year revenue by about 3 percent and predicted it will now increase annual sales by 17 percent. Numis Securities slashed its price estimate on the shares 28 percent to 1,290 pence and maintained its advice to sell the shares.
Wellstream Holdings Plc lost 2.4 percent to 761 pence after General Electric Co. said the U.K. oilfield-services provider rejected a 755 million pound takeover offer. It is unlikely GE will consider a hostile takeover, though Wellstream may be in talks with other potential buyers, Panmure Gordon analyst Peter Hitchens wrote in a note to investors today. Man Group Plc, the hedge-fund manager that’s buying GLG Partners Inc., rose 4.7 percent to 237.7 pence. Its flagship AHL Diversified Futures fund rose 3.4 percent last week, the best showing since April, the company said after the close of trading yesterday.
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