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U.K. Stocks Climb Amid Optimism ECB Will Cut Rates

U.K. stocks climbed, sending the FTSE 100 Index close to a four-week high, amid mounting optimism that central banks from Europe to the U.S. will maintain stimulus support when they meet this week.

Aberdeen Asset Management Plc (ADN) rallied to its highest price since 2001 after reporting earnings that beat analysts’ estimates and raising its interim dividend. Schroders Plc (SDR) also advanced. Balfour Beatty Plc (BBY) sank the most in five months as the U.K.’s largest construction company cut its profit forecast.

The FTSE 100 rose 31.6 points, or 0.5 percent, to 6,458.02 at the close in London, its highest level since April 2. The equity benchmark added 2.2 percent last week amid speculation the European Central Bank will cut interest rates at its meeting on May 2. It has advanced 0.7 percent so far in April, heading for its longest stretch of monthly gains since 1984.

“The ECB cutting rates this week just sends a signal that monetary policy will stay exceptionally easy,” Bob Parker, who helps oversee about $400 billion as senior adviser at Credit Suisse Asset Management, told Francine Lacqua on Bloomberg Television in London. “Is it just symbolic? The answer is probably yes.”

The broader FTSE All-Share Index climbed 0.4 percent today, heading for its longest stretch of monthly gains since 1962. Ireland’s ISEQ Index gained 0.6 percent. The volume of shares changing hands in FTSE 100-listed companies was 17 percent lower than the 30-day average, according to data compiled by Bloomberg.

Interest Rates

The ECB will lower its interest rate at a meeting this week, according to economists in a Bloomberg survey. A report last week showed that manufacturing and services output contracted in the euro area.

The U.S. Federal Reserve starts a two-day policy meeting tomorrow following a Commerce Department publication that showed the world’s largest economy expanded in the first quarter less than forecast. The Bank of England meets next week.

Stocks extended gains after a report showed that consumer spending in the U.S. rose in March more than economists had projected. Household purchases, which account for about 70 percent of the economy, climbed 0.2 percent, a Commerce Department release showed today in Washington.

Aberdeen Asset Management jumped 8 percent to 450.5 pence, for the biggest advance on the FTSE 100. (UKX) Scotland’s biggest fund manager posted first-half revenue and earnings that beat analysts’ estimates and a 13 percent jump in assets under management to 212.3 billion pounds ($328.9 billion). The company also increased its interim dividend to 6 pence from 4.4 pence a year earlier.

Schroders, Henderson

Schroders and Henderson Group Plc (HGG), rival fund managers, added 2.2 percent to 2,338 pence and 2.4 percent to 165.6 pence, respectively.

Bellway Plc (BWY) gained 3 percent to 1,377 pence after analysts at both Goldman Sachs Group Inc. and Jefferies Group LLC raised the U.K. housebuilder to buy. Jefferies cited the government’s help-to-buy program, saying it has the potential to kickstart a recovery in housing.

Balfour Beatty tumbled 9.5 percent to 222.9 pence after the construction company said that operating profit will fall short of its previous prediction by 50 million pounds because of sluggish demand in its home market.

The company forecast in November that profitability would drop as it failed to negotiate lower prices with suppliers to reflect market conditions.

Carillion Plc (CLLN), a U.K. construction and services provider, retreated 5.9 percent to 272.7 pence.

Reed Elsevier Plc lost 1.8 percent to 761.5 pence. Citigroup Inc. downgraded the owner of the LexisNexis database and New Scientist magazine to neutral from buy. The shares have rallied 18 percent year to date. The brokerage identified changes to the funding of academic publishing as a risk.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

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

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