U.K. stocks closed little changed at an eight-month high amid speculation that the Federal Reserve will expand its asset purchases to provide economic stimulus and a report that showed German investor confidence increased in December.
Whitbread Plc (WTB) rallied to a two-decade high after saying sales growth at its Costa Coffee shops increased. Asos Plc (ASC) climbed to a record high after reporting first-quarter sales that beat analyst estimates. Diageo Plc (DGE) fell 1.6 percent after the world’s largest distiller ended talks to buy the Jose Cuervo tequila brand.
The FTSE 100 added 3.34 points, less than 0.1 percent, to 5,924.97 in London, the highest since March 19. The gauge has rallied 13 percent from this year’s low on June 1 as the European Central Bank and the U.S. Federal Reserve expanded bond purchases. The broader FTSE All-Share Index was little changed, while Ireland’s ISEQ Index each increased 0.6 percent.
The FTSE 100 earlier rose as much as 0.3 percent.
“Better-than-expected economic sentiment data from Germany spurred investors into buying mode,” said Angus Campbell, head of market analysis at Capital Spreads in London. “There is also the prospect of an announcement of further stimulus from the U.S. Federal Reserve.”
The ZEW Center for European Economic Research said its index of investor and analyst expectations climbed to 6.9 this month from minus 15.7 in November. Economists in a Bloomberg survey had projected a reading of minus 11.5.
In the U.S., the Federal Open Market Committee begins a two-day meeting today and will announce its interest-rate decision tomorrow. That will be followed by forecasts on economic growth, unemployment and inflation.
The Fed will expand economic stimulus by announcing $45 billion in monthly Treasury buying in addition to its program to buy $40 billion in mortgage bonds each month, according to a Bloomberg survey of economists.
U.S. President Barack Obama sounded conciliatory notes over budget talks yesterday, in his first comments after meeting House Speaker John Boehner during the weekend. He didn’t repeat his complaint about Republican opposition to higher taxes for top earners and stressed the importance of reaching a deal.
Congress must agree on a new budget to prevent more than $600 billion of automatic tax increases and spending cuts from coming into effect next year. The Congressional Budget Office has said failure to avoid the so-called fiscal cliff may lead to a recession and a jobless rate of about 9 percent.
Whitbread gained 2.5 percent to 2,488 pence, the highest since at least January 1992, after the company said same-store sales at its Costa Coffee outlets rose 7.1 percent in the 13 weeks ended Nov. 29, compared with 3.8 percent a year earlier.
Asos advanced 3.3 percent to 2,546 pence, the highest since it sold shares to the public in October 2001. The U.K.’s largest online fashion store said retail sales increased 30 percent in the first quarter, compared with the average analyst estimate calling for a 29 percent growth.
Bumi Plc (BUMI) rallied 4.6 percent to 284.6 pence as co-founder Nathaniel Rothschild said the top five institutional shareholders support his proposal to restructure the company after his dispute with Indonesia’s Bakrie Group.
Diageo dropped 1.6 percent to 1,855.5 pence after saying it ended talks with JB y Cia. SA de C.V. and Lanceros S.A. de C.V. over its plan to buy Jose Cuervo. The London-based distiller will also end an agreement to distribute the tequila brand outside Mexico when it expires at the end of June next year.
Tullow Oil Plc (TLW) tumbled 8.4 percent to 1,150 pence, the lowest price since Sept. 6, 2011, after it said it will buy Spring Energy for $372 million and sell its North Sea holdings.
Eurasian Natural Resources Corp. lost 3.7 percent to 266.1 pence after Citigroup Inc. said in a note it expects the company to have a net debt of $5.5 billion in the first half of 2013. That will be a breach of its banking covenant of having a net debt of not more than three times earnings before interest, taxes, depreciation and amortization, Citigroup analyst Thomas O’Hara wrote, asking investors to sell the shares.
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