U.K. Stocks Climb, Rebounding From First Drop in 10 Days

U.K. stocks advanced to the highest level since May, with the FTSE 100 (UKX) Index rebounding from its first drop in 10 days, as Chinese manufacturing strengthened more than forecast.

Aberdeen Asset Management Plc (ADN) climbed 5.8 percent after saying it is in talks to buy Scottish Widows Investment Partnership and form a partnership with Lloyds Banking Group Plc. Shire Plc (SHP) jumped to a record after the drugmaker raised an earnings forecast. Sports Direct International Plc (SPD) lost 3.8 percent after founder Mike Ashley sold a part of his stake.

The FTSE 100 gained 38.7 points, or 0.6 percent, to 6,713.18 at the close. The gauge gained 5.6 percent in the nine days through Oct. 22 as companies from BHP Billiton Ltd. to British Sky Broadcasting Group Plc posted results that beat estimates and investors bet the Federal Reserve will maintain stimulus. The broader FTSE All-Share Index (ASX) rose 0.5 percent today, while Ireland’s ISEQ Index lost 0.4 percent.

“The trend of an accelerating Chinese economy that we’ve had for some months may stay,” Karim Bertoni, who helps manage $3.3 billion at De Pury Pictet Turrettini & Cie. SA in Geneva, said in a telephone interview. “This is good for the global economy and good for the stock market. You have had a strong rebound in markets. Trading will be shaky as we are not very far from a short-term overbought territory.”

The FTSE 100 trades at a relative strength index of 68, below the 70 level that is considered “overbought,” or a point where stocks may begin a decline in the absence of other supporting indicators, according to some technical analysts.

China Manufacturing

In China, the preliminary 50.9 reading this month for a purchasing managers’ index from HSBC Holdings Plc and Markit Economics exceeded the 50.4 median estimate in a Bloomberg survey. Readings above 50 indicate expansion.

Aberdeen Asset Management, Scotland’s largest fund manager, advanced 5.8 percent to 450.4 pence. The company said it’s in talks with Lloyds about a possible acquisition of the lender’s Scottish Widows unit and the formation of a “strategic partnership.”

“If agreed, the acquisition would be funded through the issuance of new shares in the company to Lloyds and additional deferred payments in cash,” Aberdeen said in a statement.

Shire soared 9.3 percent to 2,760 pence, its highest price since it sold shares to the public in 1996. The company reported third-quarter earnings of $1.77 per U.S. depositary share, compared with an estimated $1.67 in a Bloomberg survey of analysts. The company also raised its 2013 earnings-growth prediction to “mid-to-high teens” percentage points.

Ophir Energy Plc (OPHR) surged 9.1 percent to 326.7 pence, for its biggest increase since March 5. The oil and gas explorer in Africa said it began talks to sell assets in Tanzania.

Founder’s Stake

Sports Direct lost 3.8 percent to 685 pence, leading declining shares in the FTSE 100. Goldman Sachs Group Inc. managed the sale of a 2.7 percent stake in the U.K.’s largest sports retailer on behalf of Sports Direct’s Deputy Executive Chairman Ashley, at 662.5 pence per share. The price marked a 7 percent discount to yesterday’s close.

Diageo Plc (DGE), the world’s biggest distiller, slid 0.8 percent to 2,012.5 pence, its first retreat in seven days. French rival Pernod Ricard SA today said a slowdown in emerging markets will stifle profit growth.

Debenhams Plc (DEB), the U.K.’s second-largest department-store chain, fell 8.8 percent to 101 pence. The company reported full-year earnings that were in line with analysts’ estimates, and said costs will increase with inflation. Debenhams also said it remains cautious on the strength of consumer demand.

Spirent Communications Plc (SPT) dropped 4.3 percent to 118.2 pence. The company, which provides telecommunication-testing systems, said delays imposed by customers will reduce fourth-quarter sales.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

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

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