U.K. Stocks Climb After Better-Than-Expected German PMI

U.K. stocks advanced, snapping three days of losses for the FTSE 100 Index, after better-than-expected manufacturing data from Germany and China.

IMI Plc (IMI) gained 5.8 percent after posting first-half adjusted pretax profit that beat analysts’ estimates and forecasting improved trading for the remainder of the year. Wolseley Plc added 4.3 percent after UBS AG raised its recommendation on the largest distributor of plumbing and heating products to buy.

The FTSE 100 rose 56.03 points, or 0.9 percent, to 6,446.87 at the close of trading in London. The measure has still fallen 5.8 percent from a high on May 22 after Federal Reserve Chairman Ben S. Bernanke said the central bank may reduce its monthly bond purchases if the economy strengthens in line with forecasts. The broader FTSE All-Share Index advanced 0.9 percent today and Ireland’s ISEQ Index also added 0.9 percent.

“The story for much of the summer has been the improvement in the macro backdrop and the expectation of a better growth outlook,” Ashish Misra, who helps oversee $17 billion as head of investment policy and research for Lloyds TSB Private Banking in London, said in a phone interview. “Sentiment is generally getting stronger. Over the next 12 months we should see reasonable rates of returns from global equity markets.”

The volume of shares changing hands in FTSE-100 (UKX) listed companies was 18 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

German PMI

A measure of German manufacturing compiled by Markit Economics climbed to 52 in August from 50.7 in July. The median economist estimate had called for a reading of 51.1, according to a Bloomberg survey. A gauge of services advanced to 52.4, beating the median estimate of 51.7. A reading above 50 indicates expansion.

Markit’s euro-area manufacturing index indicated growth for a second month, rising to 51.3 in August from 50.3 in July. A composite index covering services and factory output also expanded for a second month, climbing to 51.7 from 50.5.

A gauge of Chinese manufacturing rose in August from an 11-month low. The preliminary reading of 50.1 for a PMI Index (EC11FLAS) released today by HSBC Holdings Plc and Markit compares with a final figure of 47.7 in July. The number beat all 16 estimates in a Bloomberg News survey and was the first reading since April above the 50 mark that divides contraction from expansion.

In the U.S., the Federal Open Market Committee’s minutes from the July 30-31 gathering released yesterday showed officials were “broadly comfortable” with Bernanke’s plan to start reducing bond buying later this year if the economy continues to improve. Several members said the central bank may need to start tapering soon.

U.S. Jobless

The fewest workers in more than five years applied for U.S. unemployment benefits over the past month, a Labor Department report showed today in Washington. The number of claims in the month ended Aug. 17 declined to 330,500 a week on average, the least since November 2007. Compared with a week earlier, claims rose by 13,000 to 336,000, in line with the median forecast of 48 economists surveyed by Bloomberg.

IMI rallied 5.8 percent to 1,491 pence, the highest price since at least 1988. The manufacturer of soda dispensers and air-conditioning equipment said first-half adjusted pretax profit rose 1 percent to 170 million pounds ($265 million), beating the 164 million pounds average analyst projection.

Wolseley (WOS) added 4.3 percent to 3,330 pence. UBS raised its recommendation on the shares to buy from neutral, citing accelerating U.S. growth, improving U.K. momentum and stabilization in Europe. The bank also added Wolseley to its most preferred list of stocks.

Commodity Producers

A gauge of mining companies in the FTSE 350 Index rose, snapping a three-day losing streak, as the price of metals advanced following the better-than-expected Chinese manufacturing data. BHP Billiton Ltd., the world’s biggest miner, climbed 1.9 percent to 1,908.5 pence. Rio Tinto Group, the second-largest, added 1.9 percent.

Fresnillo Plc, a producer of gold and silver, jumped 4.4 percent to 1,215 pence, its highest price in more than four months. Vedanta Resources Plc, the metals producer controlled by billionaire Anil Agarwal, rose 2.9 percent to 1,194.

New World Resources Plc (NWR) lost 4.1 percent to 71 pence. The unprofitable Czech coal company, which reported a wider-than-forecast loss of 315.4 million euros ($420.9 million) today, expects to complete the sale of its OKK coking unit this year and receive cash from the deal.

“We are currently negotiating a share-purchase agreement with several potential buyers,” Chief Financial Officer Marek Jelinek said by telephone today.

Premier Oil Plc (PMO) slid 2.9 percent to 346.5 pence. The energy explorer that operates from the U.K. to Southeast Asia reported first-half net income of $161 million, missing the average analyst estimate of $180 million.

To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net

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

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