U.K. stocks rose to the highest level since June 2008 amid optimism the economic recovery will continue and speculation that European governments will step up measures to ease the region’s sovereign-debt crisis.
HSBC Holdings Plc rose 3.8 percent as Barclays Plc said it is among the best funded of the biggest European banks. Xstrata Plc, Rio Tinto Group and Kazakhmys Plc tracked advances in copper prices on the London Metal Exchange. Gartmore Group Plc soared 14 percent after Henderson Group Plc agreed to buy the asset manager for 335.3 million pounds ($524 million) in stock.
The benchmark FTSE 100 Index rose 36.69, or 0.6 percent, to 6,050.72 at the 4:30 p.m. close in London. The gauge has risen 2.6 percent this year after better-than-expected corporate profits and the Federal Reserve’s strategy of buying bonds to stimulate economic growth pushed the measure 9 percent higher in 2010. The FTSE All-Share Index also gained 0.6 percent today, while Ireland’s ISEQ Index advanced 0.7 percent.
“The economic recovery is still in its infancy,” said Graham Bishop, an equity strategist at Royal Bank of Scotland Group Plc in London. “Conditions continue to favor equities and pro-cyclical positioning.”
Portugal sold 599 million euros ($778 million) of 10-year bonds at an average yield of 6.716 percent today, compared with a yield of 6.806 percent at the previous sale on Nov. 10. The auction was the first debt sale by any of the euro region’s most indebted countries this year.
European governments are considering aid for Portugal, debt buybacks, lower interest rates on rescue loans and guarantees against excessive debt as part of a package to quell the financial crisis, according to two people with direct knowledge of the talks. The plan may include a loan to Portugal of about 60 billion euros ($78 billion) and purchases of outstanding Greek debt.
HSBC rallied 3.8 percent to 715 pence, the biggest gain in five months. Barclays, which rates the shares “overweight” with a price estimate of 850 pence, says the bank benefits from a “combination of balance sheet strength and a strong emerging markets franchise,” according to a report.
Xstrata gained 1.7 percent to 1,535 pence and Rio Tinto climbed 2.2 percent to 4,542.5 pence as copper, zinc lead and nickel advanced. Kazakhmys rose 3.7 percent to 1,671 pence as Deutsche Bank AG upgraded the shares to “buy” from “hold.”
Gartmore soared 14 percent to 103 pence. Gartmore shareholders will get 0.6667 of a new Henderson share for each one they already own, Henderson said today. That values each Gartmore share at about 92.1 pence, based on yesterday’s closing price. Gartmore investors will own about 22.5 percent of Henderson after the transaction.
Henderson shares rallied 9.3 percent to 151 pence, the biggest gain in 18 months.
Croda International Plc climbed 5.4 percent to 1,625 pence as Citigroup Inc. upgraded the U.K. supplier of sun-block agents to Procter & Gamble Co. to “buy” from “hold.”
Old Mutual Plc rose 3.2 percent to 130.8 pence as BofA Merrill Lynch Global Research upgraded the insurer to “buy” from “neutral.”
J Sainsbury Plc declined 2.2 percent to 382 pence even after reporting increased quarterly sales.
“When we look at underlying growth in the business we see little that can justify its 15 percent premium to the sector and therefore urge caution,” Evolution Securities analysts, who maintained a “reduce” rating on the U.K. supermarket owner, wrote in a report.
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