U.K. Stocks Rise Most in Three Months; ARM, AB Foods Gain

U.K. stocks advanced the most since their first trading day this year as companies from ARM Holdings Plc (ARM) to Associated British Foods Plc (ABF) reported sales that exceeded analysts’ estimates.

ARM jumped the most in almost 4 1/2 years after saying that demand increased for its graphics and processing technology. AB Foods surged as the owner of the Primark discount-clothing chain also raised its dividend. Fresnillo Plc (FRES), the world’s biggest producer of primary silver, fell 2.2 percent as the price of the precious metal dropped.

The FTSE 100 Index (UKX) rose 125.5 points, or 2 percent, to 6,406.12 at the close in London, its largest rally since Jan. 2. The equity benchmark lost 1.5 percent last week as economic data from the U.S. to China and Germany missed forecasts. It has still climbed 8.6 percent this year. The broader FTSE All-Share Index gained 1.9 percent today, while Ireland’s ISEQ Index jumped 2.2 percent.

“The sentiment is positive and investors are recouping the losses of last week,” Lorne Baring, who helps oversee about $500 million as managing director of B Capital SA in Geneva, said. “Earnings expectations are low, so any good news is being seized upon as light at the end of the tunnel.”

The combined profit of companies trading on the FTSE 100 slumped 23 percent last year, the first annual decline since 2009, according to data compiled by Bloomberg.

ECB Speculation

U.K. stocks extended gains amid speculation the European Central Bank will cut its interest rate after data showed euro-area services and manufacturing output shrank for a 15th consecutive month in April.

“Speculation that the euro zone may have to take early measures in order to stimulate growth after some weak numbers across the board was a boost to the U.K. -- Europe being such a vital source of trade,” William Nicholls, a dealer at Capital Spreads in London, wrote in a note.

In China, the preliminary reading for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics fell to 50.5 in April from 51.6 in March. That missed the 51.5 median estimate of economists in a Bloomberg survey. Figures greater than 50 mean that activity increased.

ARM’s Sales

ARM surged 12 percent to 972 pence, its biggest gain since October 2008, after the designer of chips for Apple Inc.’s iPhone said that first-quarter revenue rose 29 percent to 170.3 million pounds ($260 million). That beat the 160 million-pound average estimate of analysts in a Bloomberg survey.

AB Foods jumped 8.1 percent to 1,999 pence, the highest price since at least January 1986, after reporting first-half revenue of 6.33 billion pounds, exceeding the 6.15 billion-pound average analyst estimate. The British owner of Twinings tea said first-half pretax profit rose 26 percent to 415 million pounds. The company increased its interim dividend by 10 percent to 9.35 pence a share.

Burberry Group Plc (BRBY), the U.K.’s largest luxury-goods maker, climbed 3.7 percent to 1,326 pence after Cie. Financiere Richemont SA, which owns Alfred Dunhill, reported full-year net income that beat analysts’ projections.

SABMiller Plc (SAB) advanced 3.4 percent to 3,475.5 pence as the maker of Grolsch and Peroni lager appointed Alan Clark as chief executive officer earlier than planned. Clark will take over with immediate effect, instead of in July. Previous chief Graham Mackay underwent surgery for a brain tumor yesterday, the company said.

International Consolidated Airlines Group SA (IAG) advanced 5.2 percent to 269.6 pence after saying that the majority of shareholders of Vueling Airlines SA have accepted its cash offer of 9.25 euros a share for the low-cost Spanish carrier. IAG’s subsidiary Iberia will now own a 90.51 percent stake in Vueling, from 45.85 percent earlier.

Fresnillo declined 2.2 percent to 1,092 pence as silver tumbled as much as 3.5 percent.

Cadogan Petroleum Plc (CAD), which explores for oil and gas in Ukraine, plunged 11 percent to 13.5 pence, its biggest slump since Feb. 1, after saying impairments will lead it to report a loss for 2012.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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

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