U.K. Stocks Advance as Investors Weigh U.S. Budget Talks

U.K. stocks climbed for the first time in five days, dragged higher by BP Plc (BP/), as investors looked for progress on ending a budget impasse in the U.S. and a measure of China’s services industries rose to a six-month high.

BP climbed 1.1 percent after persuading an appeals court to order a review of parts of the settlement over the Gulf of Mexico oil spill in 2010. Aviva Plc (AV/) increased 1.4 percent after reporting that it received $2.6 billion from the sale of its U.S. life-insurance and annuities business, more than it had previously disclosed. BHP Billiton Ltd. (BHP) and Glencore Xstrata Plc contributed the most to a retreat by commodity producers.

The FTSE 100 Index (UKX) added 11.54 points, or 0.2 percent, to 6,449.04 at the close in London. The equity benchmark fell 2 percent in the past four days as the U.S. federal government shut down for the first time in 17 years. The broader FTSE All-Share Index climbed 0.1 percent today, while Ireland’s ISEQ Index fell 0.2 percent.

“We’re in limbo at the moment,” Ian Williams, a market strategist at Peel Hunt LLP in London, said in a telephone interview. “There’s obviously a bit of uncertainty related to the shutdown and what that might mean. We’re on wait-and-see for that, but I don’t think the impact will be that massive even if it drags into next week.”

The partial shutdown of the U.S. government entered its third day after President Barack Obama and congressional leaders failed to break their impasse over the budget in face-to-face talks late yesterday. The move has placed as many as 800,000 federal employees on unpaid leave, closed national parks, museums and Internal Revenue Service call centers.

Partial Shutdown

A shutdown lasting one week would probably shave 0.1 percentage points from economic growth, according to the median estimate of economists in a Bloomberg survey. The cost would accelerate if the closure persists.

The standoff has intensified concern about talks to increase the $16.7 trillion limit on the nation’s debt. The Treasury has said it will exhaust measures to avoid exceeding the borrowing limit on Oct. 17. If that happens, the government would run out of cash to pay its bills by Oct. 31 at the latest, according to the Congressional Budget Office.

In China, a purchasing managers’ index for services industries climbed to 55.4 in September from 53.9 in August. That was the highest level since March, according to the National Bureau of Statistics and Federation of Logistics and Purchasing. Readings above 50 mean that activity increased.

In the U.K., the Chartered Institute of Purchasing and Supply’s PMI for services industries slipped to 60.3 in September. That fell short of the August reading of 60.5, which was also the median estimate in a Bloomberg News survey.

BP Gains

BP climbed 1.1 percent to 437.2 pence after the U.S. Court of Appeals in New Orleans yesterday ordered a district judge to stop some payments to businesses for economic losses. Europe’s second-largest oil producer said that “claimants should not be paid for fictitious or wholly non-existent losses.” Carl Barbier, the trial judge, will now have to review his interpretation of the terms of the settlement.

Aviva increased 1.4 percent to 413.1 pence. The U.K.’s second-biggest insurer by market value said it received $2.6 billion on completion of the sale of the U.S. units to Apollo Global Management LLC’s Athene Holding Ltd. That exceeded the $1.8 billion that Athene agreed to pay for the assets when the companies reached a deal on Dec. 21. The increase reflects earnings and other improvements to the company’s surplus, London-based Aviva said in a statement.

Vodafone, FirstGroup

Vodafone Group Plc (VOD) increased 1.4 percent to 222 pence. Chief Financial Officer Andy Halford will step down in March following the completion of the company’s $130 billion sale of its stake in Verizon Wireless. Nick Read, who runs Vodafone’s Africa, Middle East and Asia-Pacific business, will take his place on April 1, the telecommunications operator said.

FirstGroup Plc (FGP) added 2.5 percent to 123.7 pence after estimating that passenger revenue from its rail and bus businesses in the U.K. increased by 5.7 percent and 1.6 percent, respectively, in the six months through Sept. 30. The operator of the First Great Western train franchise will report its half-year results on Nov. 6.

A gauge of London-listed mining companies slid as metal prices fell. BHP Billiton, the world’s largest commodity producer, slipped 1.3 percent to 1,802 pence. Glencore Xstrata retreated 1.3 percent to 1,802 pence.

Sports Direct International Plc (SPD) slipped 1.5 percent to 698 pence. The chief executive officer and chief financial officer of the U.K.’s largest sports retailer each sold 950,000 shares at 680 pence apiece, according to a filing. A further 3.9 million shares were placed in an accelerated bookbuild at 690 pence each, according to a person familiar with the offering.

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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