U.K. stocks rose, rebounding from their biggest selloff in six months, as European Union leaders called on Greek voters to stick to austerity measures if they want to remain in the euro.
Randgold Resources Ltd. (RRS) rallied 8 percent as a gauge of mining companies climbed from a 2 1/2-year low. Cable & Wireless Communications Plc (CWC) jumped 18 percent after posting earnings that beat analysts’ estimates. Standard Chartered (STAN) Plc rose as JPMorgan Chase & Co. recommended the lender.
The FTSE 100 Index gained 83.64, or 1.6 percent, to 5,350.05 at the close in London, paring yesterday’s 2.5 percent tumble. The gauge has still lost 10 percent from its 2012 high, entering a so-called correction. The FTSE All-Share Index rose 1.5 percent today, while Ireland’s ISEQ Index added 1 percent.
“The FTSE 100 is remaining stubbornly in the black despite a barrage of negative data,” said Chris Beauchamp, a market analyst at IG Index in London. “All the ingredients are present for a selloff, but it seems we’ve had enough of those for now.”
Stocks sank yesterday, led by banks and mining companies, amid mounting concern Greece may leave the euro area. The decline dragged the FTSE 100 (UKX)’s valuation yesterday to 9.4 times its companies’ estimated earnings, the cheapest since November, according to data compiled by Bloomberg.
EU leaders met in Brussels last night to discuss the sovereign-debt crisis that has wiped more than $4 trillion from equity markets worldwide this month. They clashed over joint debt sales as they called on Greece to stick with the austerity measures required to stay in the euro.
A report today showed that the U.K. economy shrank more than initially estimated in the first quarter after the Office for National Statistics revised construction output to show a deeper slump. Gross domestic product fell 0.3 percent, compared with a 0.2 percent decline estimated last month.
Even so, mining companies advanced as an industry gauge rebounded from its lowest level since October 2009. Randgold increased 8 percent to 5,170 pence, Vedanta Resources Plc (VED) gained 5 percent to 999.5 pence and Rio Tinto Group rose 1.7 percent to 2,838.5 pence.
Cable & Wireless Communications jumped 18 percent to 33.01 pence, the largest gain since March 2003, after posting full-year earnings before interest, taxes, depreciation and amortization of $901 million. That exceeded the average analyst estimate of $884.5 million.
Standard Chartered gained 1.9 percent to 1,337 pence, recouping some of yesterday’s 3.7 percent drop. JPMorgan reiterated its overweight, or buy, recommendation for the lender, saying the recent decline by bank shares created an opportunity for long-term investors.
Mothercare Plc (MTC) surged 24 percent to 203.25 pence, its biggest rally since 2003. The retailer reported a 2.4 percent increase in full-year sales to 812.7 million pounds ($1.3 billion) and an 18 percent jump in international revenue. Numis Corp. raised its recommendation for the shares to buy from hold with a price estimate of 250 pence.
Banks also rebounded today. Barclays Plc (BARC) gained 2.7 percent to 185.3 pence, Royal Bank of Scotland Group Plc (RBS) increased 1.9 percent to 21.44 pence and HSBC Holdings Plc (HSBA) added 1.4 percent to 514.8 pence.
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