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U.K. Stocks Climb as HSBC, Mining Companies Advance

U.K. stocks rose, with the FTSE 100 Index reaching its highest level in more than five years, as commodity producers advanced and Britain’s equity markets reopened following a public holiday.

HSBC Holdings Plc gained 3 percent after Europe’s largest bank said first-quarter profit almost doubled. BHP Billiton Ltd. and Rio Tinto Group climbed more than 1.5 percent, dragging U.K. mining companies higher. G4S Plc plunged 15 percent as the security provider predicted that operating margin will continue to narrow this year after dropping in the first quarter.

The FTSE 100 added 35.84 points, or 0.6 percent, to 6,557.30 at the close in London, its highest level since December 2007. The equity benchmark completed an 11-month rally in April, its longest stretch of gains since the index started in 1984. The broader FTSE All-Share Index increased 0.5 percent today, while Ireland’s ISEQ Index rose 0.9 percent.

“Now the market buys any dip, and it looks like it’s pricing equities as the only asset class that can give us a decent return in this low interest-rate environment,” Otto Waser, chief investment officer at R&A Research & Asset Management AG in Zurich, told Mark Barton on Bloomberg Television. “This re-pricing is just not over.”

The Bank of England will probably leave its stimulus program on hold this week after the economy avoided a triple-dip recession in the first three months of the year. Policy makers will not expand quantitative easing beyond 375 billion pounds ($580 billion) when they meet on May 9, according to a Bloomberg News survey of economists.

Volumes Increase

The number of shares changing hands in FTSE 100-listed companies was 20 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.

HSBC, the heaviest stock on the FTSE 100 (UKX), rose 3 percent to 735 pence. Pretax profit increased to $8.43 billion in the first quarter, from $4.32 billion the year before as bad loan charges and operating costs declined. That beat the $8.04 billion that analysts had predicted.

An index of U.K. lenders advanced the most in 12 weeks as Barclays Plc climbed 3.8 percent to 307.40 pence and Standard Chartered Plc gained 2.6 percent to 1,700 pence. Lloyds Banking Group Plc added 2.1 percent to 55.19 pence, its highest price in more than 10 weeks.

A gauge of London-listed commodity producers posted its biggest three-day rally since October, paring its decline this year to 12 percent. BHP Billiton and Rio Tinto, the world’s two largest mining companies, added 1.9 percent to 1,883 pence and 1.7 percent to 3,072.5 pence, respectively.

G4S Tumbles

G4S slumped 15 percent to 260 pence, its biggest plunge since October 2011, after saying that its operating margin narrowed by 0.6 percentage points in the first quarter.

“Group margins are expected to continue to be impacted adversely in the short term,” G4S said in a statement.

Prudential Plc (PRU), the U.K.’s biggest insurer, lost 0.9 percent to 1,145 pence. The company said that the profit margin on new business at its U.S. unit narrowed to 54 percent of the annual premium equivalent in the first quarter, from 64 percent a year earlier. The annual premium equivalent is calculated as all the regular payments plus 10 percent of any lump-sum payments that the insurer received during the reporting period. The shares have still rallied 33 percent so far this year.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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

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