U.K. Stocks Rise on Greek Bailout Optimism; HSBC, Rio Tinto Gain

U.K. stocks rose for the first time in four days as investors speculated government officials may be nearing an agreement on a bailout for Greece and the U.S. economy is recovering.

Banks, led by HSBC Holdings Plc (HSBA), pulled the benchmark FTSE 100 Index higher. Anglo American Plc advanced 1.1 percent after reporting earnings that beat estimates. BowLeven Plc (BLVN), a U.K. oil explorer working in Cameroon, soared 62 percent as Dragon Oil Plc (DGO) said it is considering a takeover offer. Ashmore Group Plc (ASHM) fell 1.9 percent after HSBC cut its rating.

The FTSE 100 rose 19.69, or 0.3 percent, to 5,905.07 at the market close in London, extending this week’s increase to 0.9 percent amid optimism Greece will win a bailout and better-than- expected U.S. economic data. The gauge has climbed 19 percent from last year’s lowest level on Oct. 4. The FTSE All-Share Index gained 0.4 percent today, while Ireland’s ISEQ Index added 1.4 percent.

“The 5,900 level seems to be holding as the FTSE ends the week,” said Yusuf Heusen, a sales trader at IG Index in London. “Broad risk appetite is driving markets higher.”

Stocks rallied as investors anticipated the culmination of a seven-month effort to complete a second Greek bailout. As long as Greece meets conditions for the aid, euro-area finance chiefs will probably approve the package along with a debt swap with private creditors, coalition lawmakers were told by German officials yesterday.

U.S. Economy

The index of U.S. leading indicators gained and cost of living rose less than forecast. The Conference Board’s gauge of the outlook for the next three to six months increased 0.4 percent in January, following a 0.5 percent rise in December. The consumer-price index climbed 0.2 percent in January after no change in December, less than the 0.3 percent average forecast by economists surveyed by Bloomberg.

U.K. retail sales unexpectedly advanced for a second month in January as discounting at furniture and household-goods stores lured customers. Sales including fuel rose 0.9 percent from December, when they added 0.6 percent, the Office for National Statistics said today in London. Economists had forecast a 0.3 percent decline, according to the median of 20 estimates in a Bloomberg News survey.

A gauge of banking stocks rose 1.1 percent amid speculation the euro area’s debt crisis may be contained. HSBC, Europe’s biggest bank, added 0.7 percent to 577.7 pence.

RBS, Lloyds

Royal Bank of Scotland Plc rallied 3.2 percent to 27.6 pence, Barclays Plc (BARC) increased 1.4 percent to 248.35 pence and Lloyds Banking Group Plc (LLOY) advanced 3.1 percent to 35.46 pence.

A measure of mining companies climbed 0.3 percent. Vedanta Resources Plc rose 4.5 percent to 1,312 pence and Xstrata Plc added 1.6 percent to 1,196 pence.

Anglo American gained 1.1 percent to 2,674 pence. The mining company posted underlying earnings of $5.06 per share, exceeding the median estimate of $4.75 in a Bloomberg survey of analysts.

BowLeven surged 62 percent to 120 pence, the biggest gain since March 2009, as Dragon Oil, an oil explorer focused on Turkmenistan said it is in preliminary talks to make a bid for the company. Dragon Oil rose 0.6 percent to 547 pence.

Spectris Plc (SXS) gained 2.7 percent to 1,705 pence after the maker of production-testing gear reported an increase in annual profit and said it’s “strategically well positioned for the year ahead.”

IMI Increases

IMI Plc (IMI) added 3.6 percent to 960 pence after the engineering company bought Brazilian isolation-valve business Grupo InterAtiva.

Ashmore, a U.K. fund manager focused on emerging markets, fell 1.9 percent to 390.6 pence after its rating was cut to “underweight” from “neutral” at HSBC.

Tesco Plc (TSCO) dropped 0.8 percent to 317.9 pence as Nomura Holdings Inc. said the retailer’s introduction of trial initiatives will “take time to change customer perception and behavior.” News on the U.K.’s largest grocery chain will improve “only gradually” in 2012, Nomura wrote.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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