U.K. stocks advanced for a second day, led by a rally in mining companies, as Eurasian Natural Resources Corp. reported higher production and Lonmin Plc climbed amid falling platinum supplies.
ENRC gained the most in 4 1/2 months after posting iron-ore and ferrochrome output that beat some analysts’ estimates. Lonmin added 3 percent as Deutsche Bank AG raised its recommendation for the world’s third-largest platinum producer. Hargreaves Lansdown Plc surged to a record after reporting first-half profit that exceeded analysts’ forecasts.
The FTSE 100 Index rose 12.58 points, or 0.2 percent, to 6,295.34 at the close in London, paring an earlier rally of as much as 0.6 percent. The gauge sank 1.6 percent on Feb. 4 after Spanish and Italian bond yields climbed on signs of political uncertainty in the euro area’s weakest economies.
“Markets are obviously still nervous and that is not surprising given where we’ve come from,” Richard Jeffrey, chief investment officer at Cazenove Capital Management Ltd. told Francine Lacqua on Bloomberg Television in London. “What is driving markets at the moment are prospects of stronger growth later on this year. That is the key.”
The FTSE All-Share Index gained 0.3 percent today, while Ireland’s ISEQ Index slid 0.2 percent in Dublin as Elan Corp. erased an earlier rally. The volume of shares changing hands on FTSE 100 companies was 12 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
The FTSE 100 briefly declined as Italian 10-year bond yields climbed to as much as 4.56 percent, their highest level since Dec. 28., as former Prime Minister Silvio Berlusconi, who is appealing a four-year sentence for tax fraud, narrowed the gap in polls before elections on Feb. 24 and 25. Borrowing costs in Spain and Portugal also increased today.
German Chancellor Angela Merkel meets French President Francois Hollande in Paris today before attending tomorrow’s European Union summit in Brussels.
The shares of BP Plc, Vodafone Group Plc and Royal Dutch Shell Plc, three of the four largest stocks in the FTSE 100 by weight, fell in London trading, limiting gains.
ENRC surged 9.1 percent to 375.6 pence after the Kazakh company said that iron-ore and ferrochrome production increased 4.4 percent and 6.8 percent, respectively, beating analyst forecasts at brokerages including Credit Suisse Group AG.
“We think downside risks are limited with potential re- rating catalysts in 2013,” Liam Fitzpatrick, an analyst at Credit Suisse wrote in a note to clients today. “Earnings expectations are now more realistic and the shares offer significant optionality on earnings growth.”
The stock gained 4.5 percent yesterday in advance of today’s production report. U.K. newspapers from the Guardian to the Telegraph and the Times cited takeover speculation as a reason for the shares’ rally.
Lonmin increased 11.1 pence to 378.9 pence as Barclays Plc forecast platinum supplies will fall to a 13-year low as mines in South Africa close and automobile sales climb.
Production will drop 2.7 percent to 5.68 million ounces, the least since 2000, according to the bank, which raised its shortage estimate for 2013 sixfold last month. Carmakers, the biggest consumers, will increase their demand for the metal by 0.5 percent in 2013, Barclays said. Deutsche Bank upgraded Lonmin’s shares to hold from sell.
Hargreaves Lansdown surged 11 percent to 817 pence, the highest price since its initial public offering in 2007. The U.K.’s largest retail broker reported first-half pretax profit and revenue that beat analysts’ estimates and a 42 percent jump in net inflows to 1.65 billion pounds ($2.6 billion). The company also increased its dividend by 24 percent.
ICAP Plc rallied 5.3 percent to 356.9 pence.
Schroders Plc climbed 2.9 percent to 1,999 pence after Morgan Stanley upgraded the firm to overweight, the equivalent of a buy rating. The brokerage also raised its earnings estimates for European asset managers by 5 to 10 percent. The analysts cited improved markets and increased flows.
Man Group Plc rose 4.8 percent to 95.1 pence. UBS AG added the world’s largest publicly traded hedge-fund manager to the list of its most preferred stocks, saying the company could announce “material strategic changes” when it releases its full-year results on Feb. 28.
In Ireland, Elan tumbled 6.3 percent to 7.23 euros after the drugmaker held a conference call with analysts. The shares had surged as much as 11 percent after Biogen Idec Inc. agreed to buy its stake in the Tysabri multiple-sclerosis drug for $3.25 billion in cash plus future royalties.
“Investors are uncertain what the company will do going forward and what the return to shareholders will be,” Olav Zilian, an analyst at Helvea SA in Geneva, said in a phone interview. “The question is where the cash will be spent.”
Chief Executive Officer Kelly Martin told analysts that the company will begin deploying cash as soon as the deal is closed and would look at share buybacks. Chief Financial Officer Nigel Clerkin said the drugmaker did not plan to do anything with Elan’s current debt level.
DCC Plc added 3.8 percent to 25.69 euros after the company said third-quarter revenue and operating profit have increased from a year earlier. DCC forecast that full-year operating profit on continuing activities will increase 17.5 percent.
Smurfit Kappa Group Plc advanced 2.7 percent to 10.32 euros after reporting full-year sales and earnings that were in line with analysts’ estimates. Chief Financial Officer Ian Curley said the company has seen stable demand since the end of the fourth quarter.
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