U.K. Stocks Post Biggest Rally Since May 2010; Barclays Advances
U.K. stocks advanced for a second day, with the FTSE 100 Index (UKX) posting its biggest rally since May 2010, as banks and commodity companies rallied the most in a week.
Barclays Plc (BARC) and Lloyds Banking Group Plc (LLOY) both climbed more than 6 percent, while BHP Billiton Ltd. (BHP) led mining companies higher, jumping 4.8 percent. SuperGroup Plc (SGP) rallied 7 percent as the owner of the Superdry clothing brand reported a 66 percent gain in first-quarter sales.
The FTSE 100 rose 161.75, or 3.1 percent, to 5,318.59 at the 4:30 p.m. close in London, extending yesterday’s 1.1 percent advance. The gauge has climbed 6.2 percent from this year’s lowest level on Aug. 10 after a 16 percent slump from the start of July dragged equities to their lowest price-to-earnings ratio since March 2009. The gauge has still fallen 13 percent from this year’s high in February.
“We are not on the edge of Armageddon,” said Justin Urquhart Stewart, who helps oversee about $3.3 billion at 7 Investment Management in London. “Areas of the world are still growing. We’re seeing a nice little relief rally.”
The FTSE All-Share Index (ASX) gained 3 percent today, while Ireland’s ISEQ Index rose 2.8 percent.
The Federal Reserve will release its Beige Book survey of U.S. economic conditions today after the close of European trading. President Barack Obama will address Congress tomorrow on his plan to boost job growth.
German Court Decision
In Germany, the top court rejected three constitutional challenges to the country’s participation in the euro rescue funds. The Federal Constitution Court dismissed lawsuits intended to block Germany’s share of a loans package for Greece and a separate fund approved last year to stop the sovereign- debt crisis from spreading.
Barclays, the U.K.’s second-largest bank by assets, surged 6.1 percent to 159.95 pence, snapping a three-day selloff. Lloyds advanced 6.4 percent to 32.73 pence and Royal Bank of Scotland Group Plc (RBS) soared 6.1 percent to 22.46 pence.
A gauge of U.K. banks rose 4.2 percent, paring this week’s drop. The cost of insuring against default on European sovereign debt and bank debt surged to a record earlier this week amid signs that European lenders may be struggling to get funding.
BHP Billiton, the world’s biggest mining company, jumped 4.8 percent to 2,036 pence as base metals advanced in London. Rio Tinto Group increased 4.2 percent to 3,697 pence and Xstrata Plc gained 5.4 percent to 1,031 pence.
SuperGroup rallied 7 percent to 1,059 pence after reporting a 66 percent gain in first-quarter sales as it opened more stores in the U.K. and overseas.
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