U.K. Stocks Increase as Tesco Advances; Xstrata, Unilever Rally

U.K. stocks climbed to a three-week high, led by retailers and mining companies, as Tesco Plc reported a pickup in sales and base-metal prices surged.

Tesco, Britain’s largest supermarket chain, advanced 2.4 percent. Smaller rival J Sainsbury Plc rallied 4.3 percent amid renewed speculation Qatar may be considering a takeover. Antofagasta Plc and Xstrata Plc climbed as copper jumped to a record in London. Unilever rose 2.9 percent after Morgan Stanley recommended the world’s second-biggest consumer-goods maker.

The FTSE 100 Index gained 38.17, or 0.7 percent, to 5,808.45 at the 4:30 p.m. close in London, the highest level since Nov. 15. The gauge has climbed 5.1 percent so far this month, rebounding from November’s 2.6 percent slide. The FTSE All-Share Index rose 0.7 percent today, while Ireland’s ISEQ Index advanced 1.8 percent as Finance Minister Brian Lenihan published a 6 billion-euro ($8 billion) budget plan aimed at boosting investor confidence.

“The FTSE 100 has firmly bounced back from the selloff endured over November and now looks positioned for another attack at the 5,900 level,” said Joshua Raymond, market strategist at City Index in London. “Strong sales at Tesco have helped to provide a boost for retail stocks.”

A report today showed U.K. manufacturing expanded twice as much as economists forecast in October, a sign the recovery is maintaining momentum into the final quarter of the year.

Output rose 0.6 percent from September, the most in seven months, the Office for National Statistics said. The median forecast of 23 economists in a Bloomberg News survey was for an increase of 0.3 percent.

Tesco Sales

Tesco rose 2.4 percent to 430 pence after the retailer said sales in the peak Christmas period are ahead of its forecasts. Revenue at U.K. stores open at least a year rose 0.7 percent to 0.8 percent, excluding gasoline and including value-added tax in the 13 weeks to Nov. 27. That beat the 0.3 percent median estimate of analysts surveyed by Bloomberg. International same- stores sales rose 4.1 percent.

“There are some encouraging signs in this statement,” said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers in London. “In particular, the growth in overseas sales continues apace, with promising numbers from Europe, Asia and the U.S.”

Sainsbury rallied 4.3 percent to 372.8 pence, the biggest gain since July, amid speculation Qatar Investment Authority may consider buying the U.K.’s third-largest supermarket company.

‘Looking to Bid’

“Sainsbury is up on renewed speculation that Qatar is looking to bid between 425 pence and 450 pence per share,” said Jawaid Afsar, a trader at Securequity Ltd. in Sheffield, England.

The Financial Times reported in October that Qatar may still be interested in acquiring the retailer, citing an interview with Sheikh Hamad bin Khalifa al-Thani. A spokesman for Sainsbury declined to comment when contacted by Bloomberg News today.

Antofagasta, owner of copper mines in Chile, gained 4.9 percent to 1,528 pence. Xstrata, the world’s fourth-largest copper producer, increased 1.6 percent to 1,460.5 pence. BHP Billiton Ltd. climbed 1.7 percent to 2,481 pence.

Copper rose to a record on concern governments may need to pump more money into economies to support a recovery, fueling inflation and eroding currency values. Copper for three-month delivery climbed as high as $9,044 a metric ton on the London Metal Exchange.

Unilever Upgrade

Unilever gained 2.9 percent to 1,906 pence after Morgan Stanley raised its recommendation for the maker of Lipton Tea to “overweight” from “underweight” and lifted its price estimate for the shares by 21 percent to 2,300 pence.

Homebuilders led gains on the broader FTSE 250 Index as Bellway Plc said first-half pretax profit will increase as much as 20 percent.

Bellway, which focuses on first-time buyers, advanced 9.8 percent to 612.5 pence. Barratt Developments Plc, the U.K.’s biggest homebuilder by volume, gained 9.5 percent to 86.3 pence. Taylor Wimpey Plc climbed 6.5 percent to 29 pence and Persimmon Plc surged 8.8 percent to 416.4 pence.

BP Plc, which is seeking to cover clean-up costs from its Gulf of Mexico oil spill, increased 1.1 percent to 455 pence. The company is weighing the sale of some North Sea assets that may raise as much as $1 billion, according to a person familiar with the matter.

BP, Wolseley

BP may sell some fields and infrastructure in a region where it has operated for more than 40 years, said the person, who declined to be identified because the discussions are private and no decision has been reached. Toby Odone, a BP spokesman in London, declined to comment.

Wolseley Plc climbed 2.7 percent to 1,880 pence as the world’s largest supplier of heating and plumbing products said trading in the three months to Oct. 31 was “slightly ahead of management expectations.”

Focus Solutions Group Plc jumped 9.8 percent to 140 pence after Standard Life Plc, Scotland’s biggest insurer, agreed to buy the financial software maker for about 42 million pounds ($66 million).

ICAP Plc fell 1.7 percent to 519 pence after IPGL Ltd.’s wholly owned subsidiary, INCAP Finance BV sold a stake in the interdealer broker for about 30.7 million pounds. HSBC Holdings Plc placed 6 million shares on behalf of INCAP for 512 pence apiece.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

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

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