U.K. Stocks Climb as Mining Rally Reverses FTSE 100 Drop

U.K. stocks rose, with the FTSE 100 Index rebounding from its largest decline since November, as a rally in basic-resource shares reversed earlier losses.

BHP Billiton Ltd. (BHP) and Rio Tinto Group, the biggest London- listed mining companies, advanced more than 1 percent as copper climbed. British Sky Broadcasting Group Plc (BSY) sank to a seven- month low as the pay-TV broadcaster in which Rupert Murdoch’s News Corp. owns a 39 percent stake said its Sky News channel approved the hacking of e-mails on two occasions.

The FTSE 100 gained 19.9 points, or 0.4 percent, to 5,723.67 at the close in London. The gauge declined as much as 0.7 percent earlier as British manufacturing output unexpectedly contracted and concern about the euro-area debt crisis resurfaced. The FTSE All-Share Index rose 0.3 percent today, while Ireland’s ISEQ slipped less than 0.1 percent. Western European markets are closed tomorrow and April 9 for Easter.

“Investors will be pleased to see that we’re going into the Easter break without adding to yesterday’s big declines,” said Angus Campbell, the head of market analysis at Capital Spreads in London. “Negative sentiment turned positive as Spanish bond yields retreated following an earlier spike, allowing investors to dip back into beaten-up equities.”

Spanish Debt

The yield difference, or spread, between Spanish 10-year bonds and similar-maturity German bunds rose to more than 400 basis points, or 4 percentage points, for the first time since Dec. 12 today. Spain’s 10-year yield climbed 7 basis points to 5.74 percent at 5 p.m. in London, having previously advanced as much as 15 basis points.

The FTSE 100 (UKX) posted a 0.8 percent decline this week, a third straight drop for the longest losing streak since June, as the Federal Reserve damped expectations of more monetary stimulus for the world’s largest economy and demand fell at a Spanish bond auction.

U.K. factory output fell 1 percent in February from January, the Office for National Statistics said today in London. The median forecast of 24 economists in a Bloomberg News survey had called for an increase of 0.1 percent.

Bank of England Governor Mervyn King and his committee voted today to leave their asset-purchase program unchanged at 325 billion pounds ($515 billion), as predicted by all 39 economists surveyed by Bloomberg News. The panel also left its benchmark interest rate at a record-low 0.5 percent, a decision predicted by all 53 economists in a separate survey.

U.S. Economy

In the U.S., a Labor Department report showed that initial jobless claims fell by 6,000 to 357,000 last week, the lowest level in four years. The median forecast of 43 economists in a Bloomberg News survey estimated a decrease to 355,000.

BHP Billiton, the world’s largest mining company, gained 1.6 percent to 1,907 pence. Rio Tinto advanced 1.6 percent to 3,460 pence.

JJB Sports Plc (JJB) rallied 4.6 percent to 17 pence after Dick’s Sporting Goods Inc. said it will inject an initial 20 million pounds into JJB through the purchase of new shares and convertible notes. The company also said it has an option to double the investment during the first quarter of 2013.

Dechra Pharmaceuticals Plc (DPH) surged 7.4 percent to 498.5 pence after agreeing to buy Eurovet Animal Health BV from A.U.V. Holding BV for 135 million euros ($177 million) in cash. Dechra plans a rights issue to raise about 60 million pounds for the acquisition.

BSkyB Hacking

BSkyB shares fell 3.4 percent to 635.5 pence, the lowest since Aug. 26. Executives of Sky News cleared a reporter to access e-mails as part of his investigations into “criminal activity,” including the 2008 case of a British couple who faked the husband’s death to collect life and mortgage insurance, the channel said in a statement today.

A phone-hacking scandal involving reporters of News Corp.’s News International publishing unit illegally listening to voice-mail messages of politicians and celebrities prompted the company to close its most popular title, the News of the World, in July.

Halfords Group Plc (HFD) sank 2.2 percent to 308.4 pence after the seller of car parts and bicycles said that its underlying costs will increase 4 percent in 2013. Earnings estimate downgrades of as much as 15 percent are likely, Singer Capital Markets analyst Mark Photiades said.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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

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