U.K. Stocks Advance for Second Day; Vedanta, ARM Climb
U.K. stocks advanced for a second day as mining companies gained and ARM (ARM) Holdings Plc climbed after Apple Inc.’s earnings, outweighing data that showed the British economy contracted for a second straight quarter.
Vedanta Resources Plc (VED), the largest copper producer in India, rallied 4.3 percent for the biggest increase in the FTSE 100. (UKX) ARM, which designs chips for Apple’s iPhone and iPad, rose 1.1 percent after the U.S. company reported profit that exceeded estimates. Man Group Plc (EMG) extended yesterday’s rally amid continued speculation the world’s biggest publicly traded hedge- fund manager may be a takeover target.
The benchmark FTSE 100 advanced 9.4 points, or 0.2 percent, to 5,718.89 at the close in London. The gauge has increased 2.6 percent this year as U.S. economic data exceeded forecasts and the European Central Bank moved to support the economy. The FTSE All-Share Index also added 0.2 percent today, while Ireland’s ISEQ Index surged 1 percent.
“Apple pulled its usual rabbit out of the hat last night, smashing expectations for its quarterly earnings, and this has helped to keep the bulls broadly in charge,” said Yusuf Heusen, a sales trader at IG Index in London.
The U.K. economy shrank in the first quarter as construction slumped, pushing Britain into its first double-dip recession since 1970s. Gross domestic product contracted 0.2 percent from the fourth quarter of 2011, when it shrank 0.3 percent, the Office for National Statistics said. The median of 40 estimates in a Bloomberg survey was for a gain of 0.1 percent. A technical recession is defined as two straight quarters of contraction.
Bank of England policy maker David Miles said his vote for more so-called quantitative easing this month still looks vindicated. Miles was the sole official seeking more stimulus, after his colleague Adam Posen switched his vote and policy makers said inflation may turn out faster than forecast.
“The weakness of demand, given the amount of spare capacity in the economy, still made a strategy of having monetary policy even more expansionary the right one,” Miles said in an interview in London yesterday. “On reflection that seems to me still the right strategy.”
In the U.S., the Federal Reserve’s policy-setting panel will probably repeat in a statement today that subdued inflation and economic slack will result in “exceptionally low” interest rates through at least late 2014, economists said. The statement is due around 12:30 p.m. in Washington.
About 90 minutes later, the Fed will release policy makers’ forecasts for growth, unemployment, inflation and the appropriate path of the federal funds rate over the next several years. Chairman Ben S. Bernanke will hold a press conference at 2:15 p.m.
A gauge of London-listed mining companies rose 2 percent as base metals including copper and nickel climbed. Vedanta advanced 4.3 percent to 1,225 pence. Fresnillo Plc (FRES) added 3.4 percent to 1,597 pence. Glencore International Plc (GLEN) and Xstrata Plc (XTA) climbed 3.2 percent to 429.2 pence and 3 percent to 1,183 pence, respectively.
ARM advanced 1.1 percent to 537.5 pence. Apple, which uses chips designed by ARM, climbed in New York trading after reporting that robust demand for the iPhone in China fueled a 94 percent surge in quarterly profit.
ARM was upgraded to hold from underperform at Jefferies Group Inc. and to buy from hold at Natixis.
Man Group rose 2.8 percent to 95.2 pence. Analysts at UBS AG said in a report yesterday that the past year’s share-price decline makes it a takeover target.
International Consolidated Airlines Group rallied 3.3 percent to 174.1 pence. Chief Executive Officer Willie Walsh said the company may bring a Gulf airline into the Oneworld alliance this year and considers Qatar Airways Ltd. to be a top candidate.
GlaxoSmithKline Plc (GSK) sank 3 percent to 1,413.5 pence, the biggest drop in three months. The U.K.’s largest drugmaker reported first-quarter profit and sales that missed analyst estimates as revenue declined in Europe.
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