U.K. Stocks Climb as Debt-Crisis Concern Eases; RBS, BP Advance
U.K. stocks rose the most in a month, paring last week’s slump, as concern eased that Europe’s debt crisis will curb company profits.
Royal Bank of Scotland Group Plc (RBS) climbed 5.3 percent, pacing gains among lenders. BP Plc (BP/) advanced 2.9 percent, leading commodity producers higher. Randgold Resources Ltd. (RRS) fell 7.9 percent as strikes and wet weather in Ivory Coast affected mining.
The benchmark FTSE 100 Index added 148.11, or 2.9 percent, to 5,312.76 at the close, the largest gain since Oct. 27. The gauge retreated 3.7 percent last week as rising bond yields across the euro area added to concern the region’s debt crisis is deepening. The FTSE All-Share Index gained 2.8 percent today, while Ireland’s ISEQ Index rose 3.2 percent.
“In the last few days, it seems some European leaders are moving faster,” said Herbert Perus, who helps oversee about $36 billion as head of global equities at Raiffeisen Capital Management in Vienna. “The fundamentals are good for companies, most stocks are cheap. We are positive and happy to be invested in equities. But most of our peers are not.”
The FTSE 100 will rally 24 percent to 6,400 through the end of next year, according to a forecast by Deutsche Bank AG strategists. Even if the euro area enters a recession, U.K. (DAX) stocks can surge as London-listed companies get only 15 percent of their sales from Europe, Gareth Evans and Michael Biggs wrote in a report.
About $4.6 trillion has been wiped off from global equity values this month as concern Europe’s crisis will spread spurred a surge in French, Spanish and Italian borrowing costs.
German Chancellor Angela Merkel and French President Nicolas Sarkozy are discussing a fast-track stability agreement, Welt am Sonntag reported, without saying where it got the information. Under the deal, member states will commit to greater fiscal discipline without waiting to change European Union treaties, according to the newspaper.
German Finance Minister Wolfgang Schaeuble urged fast-track treaty changes to tighten budget discipline among euro-area member states. Schaeuble said in an interview with ARD television in Berlin yesterday that treaty change is necessary to empower the European Commission to veto member-state budgets.
Separately, La Stampa reported that the International Monetary Fund is preparing a 600-billion euro ($800 billion) loan for Italy in case the debt crisis worsens, without saying where it got the information.
‘No IMF Plans’
An IMF official today said the Washington-based lender is not in talks with Italy about a loan program. “There are no discussions with the Italian authorities on a program for IMF financing,” the spokesperson said via e-mail.
U.S. retail sales during the Thanksgiving weekend climbed 16 percent to a record, suggesting consumer demand is picking up in the world’s largest economy.
RBS rallied 5.3 percent to 19.74 pence and HSBC Holdings Plc (HSBA) advanced 4.6 percent to 488.75 pence. Lloyds Banking Group Plc (LLOY) gained 2.1 percent to 23.68 pence and Barclays Plc (BARC) rose 7.8 percent to 167.85 pence. The FTSE 350 Banks Index (F3BANK) has slumped 31 percent this year.
BP added 2.9 percent to 437.8 pence and Royal Dutch Shell Plc (RDSA) climbed 1.8 percent to 2,139.5 pence. Oil rose above $100 a barrel in New York for the first time in more than a week on signs of U.S. economic recovery, while sanctions on Syria stoked concern Middle East crude supplies may be threatened.
Thomas Cook Rebounds
Thomas Cook Group Plc (TCG) surged 21 percent to 21.73 pence after banks agreed to provide a loan that will give Europe’s second-largest tour operator time to reorganize its business. The shares have now recouped almost half of the 75 percent drop on Nov. 22, when the company said it was in talks with banks and delayed its annual results.
Randgold Resources fell 7.9 percent to 6,240 pence. Wet weather, a labor-union stoppage and problems with power supply slowed output at the company’s Tongon mine in Ivory Coast, Randgold said in a statement. Production at its Loulo mine in Mali was also lower than forecast. Randgold had already reduced its 2011 production estimate in August from 750,000 to 790,000 ounces after rain affected output in Mali.
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