U.K. Stocks Rise to 6-Week High as Fed Maintains Stimulus

U.K. stocks rose to their highest level in more than six weeks as the Federal Reserve refrained from reducing its $85 billion of monthly asset purchases.

A gauge of London-listed lenders rose following the Fed’s decision. Aberdeen Asset Management Plc (ADN) jumped 6.4 percent as emerging-market stocks rose to their highest level since May. Asos Plc (ASC) rallied to a record as the online fashion retailer posted quarterly sales growth that exceeded analysts’ projections. Booker Group Plc (BOK) rose 2.3 percent after the food wholesaler said total revenue jumped.

The FTSE 100 Index (UKX) gained 66.57 points, or 1 percent, to 6,625.39 at the close of trading London. The equity benchmark has rallied 9.9 percent from a low on June 24 as the Bank of England said it will leave interest rates at a record low until the unemployment rate falls to 7 percent. The broader FTSE All-Share Index rose 0.9 percent today, while Ireland’s ISEQ Index increased 0.6 percent to a five-year high.

“Many people expected a $10 billion to $15 billion reduction, so it was very surprising,” said William Hobbs, the London-based head of equity strategy at Barclays Plc’s wealth-management unit. “Bernanke talked as dovishly as he possibly could. He doesn’t want to leave the Fed with the bond market spiraling out of control. That’s not the legacy he wants.”

The Fed yesterday said it needs to see more evidence of improvement in the U.S. economy before reducing its monthly asset purchases. Of 64 economists surveyed by Bloomberg News before the announcement, 44 predicted that policy makers would decide to buy a smaller amount of Treasuries.

Labor Market

Fed Chairman Ben S. Bernanke, whose term ends on Jan. 31, said that he was concerned by rising bond yields. He also said that restrictions to government spending posed risks.

The number of shares trading hands in FTSE 100-listed stocks was 31 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.

A gauge of London-listed lenders added 0.8 percent. Royal Bank of Scotland Group Plc rose 1 percent to 369 pence, its highest price in 26 months, while Standard Chartered Plc (STAN), which generates most of its revenue from Asia, increased 3.3 percent to 1,564 pence.

Gold producers also rallied after the precious metal jumped the most in more than 15 months yesterday on the Fed’s decision. Randgold Resources Ltd. (RRS) surged 8.1 percent to 4,841 pence, its biggest gain in 17 months, while Fresnillo Plc (FRES) increased 6.1 percent to 1,069 pence. Polymetal International Plc surged 7.9 percent to 705.5 pence, ending an eight-day losing streak.

Aberdeen Rallies

Aberdeen Asset Management jumped 6.4 percent to 390.8 pence as the MSCI Emerging Markets Index rallied 2.4 percent. The money manager held 34 percent of its equity holdings and 14 percent of its fixed-income assets in emerging markets at the end of June, according to its website.

Asos surged 13 percent to 5,469 pence, its biggest gain in a year. Total sales increased 47 percent in the three months through August, more than the 43 percent median analyst prediction compiled by Bloomberg. Sales in Europe excluding the U.K. climbed 73 percent in the period, exceeding the 58 percent growth projected by analysts. The stock has doubled this year.

Booker rose 2.3 percent to 136.3 pence after saying warmer weather helped generate strong sales in the 12 weeks to Sept. 13. Total group sales, including its Makro Holding Ltd. subsidiary, rose 19 percent, the company said in a statement.

United Utilities Group Plc (UU/) added 2.3 percent to 707.5 pence after forecasting that half-year sales will increase from a year earlier because regulated prices have climbed. Profit will probably also rise in the six months through Sept. 30, the company predicted in a statement.

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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