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U.K.’s FTSE 100 Posts Best Month Since October 2011

U.K. stocks advanced, with the benchmark FTSE 100 Index posting its biggest monthly gain since October 2011, as companies from Diageo Plc (DGE) to Centrica Plc (CNA) reported profit that exceeded analysts’ estimates.

Diageo and SABMiller Plc (SAB) followed European food and beverage companies higher. Centrica rose 1.4 percent after posting first-half profit that beat forecasts. Moneysupermarket.com Plc tumbled the most in five years as it said changes to Google.com resulted in lower rankings for its price-comparison site in June, affecting sales.

The FTSE 100 gained 50.11 points, or 0.8 percent, to 6,621.06 at the close in London. The gauge rallied 6.5 percent in July as the Federal Reserve said it remains flexible on the pace of bond buying and as the Bank of England provided forward guidance on interest rates for the first time. The broader FTSE All-Share Index added 0.7 percent today, while Ireland’s ISEQ Index each rose 0.6 percent today.

“For U.K. stocks, the domestic economy is getting much better and I expect that optimism to continue, certainly for the rest of the summer,” said Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England. “U.K. earnings have been OK. One of the things in favor for U.K. companies is that domestic and U.S. operations have been good.”

U.S. Economy

In the U.S., gross domestic product rose at a 1.7 percent annualized rate in the second quarter, from a 1.1 percent gain in the previous three months, a Commerce Department report showed. The median estimate of economists surveyed by Bloomberg had called for a 1 percent pace.

The Fed will end a two-day policy meeting and announce its rate decision after European markets close today. The central bank will leave its benchmark interest rate unchanged at 0.25 percent, according to economists surveyed by Bloomberg. In a separate survey, economists forecast that the Fed will start reducing its $85 billion monthly bond-purchase program in September.

“Everyone is looking at September as the time frame for the Fed’s transition into tapering. I’d be surprised if they say something that would upset that road map,” Lane said.

The volume of shares changing hands in FTSE 100 (UKX) companies today was 9.8 percent lower than the 30-day average, data compiled by Bloomberg show.

Diageo, SABMiller

Diageo rose 3.2 percent to 2,054 pence after posting operating profit excluding some items of 3.53 billion pounds ($5.38 billion), compared with a 3.48 billion-pound median estimate. The world’s biggest distiller also said sales excluding acquisitions and currency effects rose 5 percent, exceeding the 4.7 percent increase estimated by analysts in a Bloomberg survey.

A gauge of food and beverage makers was the best performer among 19 industry groups in the Stoxx Europe 600 Index as Anheuser-Busch InBev NV, the world’s biggest brewer, reported second-quarter profit growth that topped estimates. SABMiller, the second-biggest, gained 2.6 percent to 3,220.5 pence.

Centrica climbed 1.4 percent to 391 pence as the biggest energy supplier to U.K. households said first-half adjusted earnings rose to 767 million pounds from a revised 753 million pounds a year earlier. Analysts in Bloomberg survey had projected 719 million pounds.

Tullow Oil Plc (TLW) gained 1.1 percent to 1,038 pence as the U.K. explorer that found oil in Kenya raised its resources estimate by about 20 percent to more than 300 million barrels of oil equivalent.

Conviviality Retail Plc, owner of the Bargain Booze liquor-store chain, surged 30 percent to 130 pence on its first day of trading. More than 4.6 million shares changed hands in 103 trades, according to data compiled by Bloomberg.

Conviviality raised about 64 million pounds from the share sale, making it the largest offering on the Alternative Investment Market this year, according to data from the London Stock Exchange website.

Moneysupermarket plunged 15 percent to 181 pence, the biggest drop since July 2008. The U.K.’s largest price-comparison site said Google Inc.’s changes at the end of May to its search algorithms and competitors’ new television-advertising campaigns affected its sales in June.

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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