U.K. Stocks Climb as Commodity Prices Advance; Rio Tinto Rises

U.K. stocks rose for the first time in three days as higher metals prices and a weaker U.S. dollar boosted raw-materials companies.

BHP Billiton Ltd. and Rio Tinto Group led mining companies higher. Vodafone Group Plc advanced after rival France Telecom SA said earnings increased more than analysts predicted. AstraZeneca Plc, the U.K.’s second-biggest drugmaker, dropped 3.3 percent after saying third-quarter profit fell.

The benchmark FTSE 100 Index advanced 31.87, or 0.6 percent, to 5,677.89 at the 4:30 p.m. close in London. The gauge has rallied 18 percent since its low this year on July 1 as investors speculated that the U.S. Federal Reserve will announce additional measures to spur the economy at its November meeting, while companies from Nokia Oyj to Fiat SpA reported results that topped estimates. The FTSE All-Share Index rose 0.5 percent today, while Ireland’s ISEQ Index slipped 0.2 percent.

The Fed asked bond dealers and investors for their estimates of central bank asset purchases over the next six months, along with the likely effect on yields, as it sought to gauge the possible impact of a new program of quantitative easing, according to a survey obtained by Bloomberg News.

“The Fed is doing everything it possibly can and is in unchartered territory as we’ve never had the economic conditions that we’re experiencing at the moment,” said James Bevan, the chief investment officer at CCLA Investment Management Ltd., on Bloomberg Television’s “On The Move” with Mark Barton. “The Fed is absolutely right to go out and gauge reaction because this is all about sentiment, not about reality.”

U.S. Jobless Claims

U.K. stocks extended their gains after the U.S. Labor Department reported that applications for unemployment benefits unexpectedly fell last week to the lowest level in three months, a signal that the jobs market has started to recover. Initial jobless claims decreased by 21,000 to 434,000 in the week ended Oct. 23, the lowest since early July, Labor Department figures showed today in Washington.

BHP Billiton, the largest mining company, rose 2.7 percent to 2,221 pence. Rio Tinto, the third-biggest, gained 1.3 percent to 4,105.5 pence. Copper, nickel and tin prices climbed in London.

Vodafone gained 2.7 percent to 170.7 pence. France Telecom posted a 1.9 percent increase in third-quarter earnings before interest, taxes, depreciation and amortization to 4.26 billion euros, as it expanded into Africa and the Middle East. Analysts had predicted Ebitda of 4.14 billion euros, according to the average of nine estimates compiled by Bloomberg. Revenue climbed 4 percent.

AstraZeneca, Aggreko

AstraZeneca dropped 3.3 percent to 3,139.5 pence, its largest slide in eight months. Net income declined to $1.55 billion from $2.12 billion a year earlier. The company set aside $473 million in the quarter to resolve product liability lawsuits over its Seroquel anti-psychotic medicine. AstraZeneca also reported higher restructuring costs of $212 million.

Aggreko Plc declined 4.2 percent to 1,592 pence after Numis Securities Ltd. downgraded the shares to “sell,” even though the company reported a 30 percent increase in third-quarter sales.

“Today’s trading update was very much expected,” London- based Numis analyst Mike Murphy wrote in a report. “We see the shares as expensive.”

Mouchel Group Plc slumped 30 percent to 88 pence. The U.K. road- and infrastructure-maintenance company reported a full- year loss of 13.46 million pounds ($21.5 million), compared with a loss of 12.99 million pounds a year earlier.

Premier Foods Plc sank 4 percent to 18 pence after saying third-quarter total sales fell 4.2 percent as revenue from non- branded products declined.

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

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net

Oct. 28 (Bloomberg) -- James Bevan, chief investment officer at CCLA Investment Management, talks about Banco Santander SA's dividend policy and Royal Dutch Shell Plc's earnings. He speaks with Mark Barton on Bloomberg Television's "On The Move." (Source: Bloomberg)