U.K. stocks climbed, posting their biggest rally this year, as a report showing a slowdown in U.S. job creation bolstered speculation that the Federal Reserve won’t rush to slow its bond-buying program.
Glencore Xstrata Plc dragged a gauge of mining companies higher as metal prices rose and Barclays Plc recommended buying the shares. Tullow Oil Plc (TLW) jumped 7.6 percent as people familiar with the matter said that Norway’s Statoil ASA has studied buying the oil-and-gas explorer. IMI Plc (IMI) advanced 2.3 percent as Bank of America Corp. upgraded its rating on the stock.
The FTSE 100 Index (UKX) increased 48.6 points, or 0.7 percent, to 6,739.94 at the close in London, taking the equity benchmark’s weekly advance to 0.1 percent. The broader FTSE All-Share Index (ASX) added 0.9 percent today. Ireland’s ISEQ Index lost 0.3 percent, paring its gain this week to 3.2 percent.
“These non-farm payrolls were distorted by the weather, but in any case the Fed will reassess the situation and possibly wait before tapering,” said Stephane Ekolo, strategist at Market Securities in London.
The U.S. Labor Department said that payrolls climbed last month at the slowest pace since January 2011, a pause in the recent strength of the jobs market that may have reflected the effects of bad weather. Employers hired a net 74,000 people in December, fewer than the median economist estimate of 197,000. The department’s release also showed that the unemployment rate unexpectedly dropped to 6.7 percent, its lowest level since October 2008, as more people left the labor force.
The Fed has made job creation a determining factor of its monetary stimulus. The central bank said on Dec. 18 that it would reduce the pace of bond buying amid faster-than-estimated economic growth. Three rounds of stimulus, known as quantitative easing, have propelled the S&P 500 to a rally of as much as 173 percent from a 12-year low in 2009.
U.K. industrial production was unchanged in November, the Office for National Statistics reported today. Economists had forecast an increase of 0.4 percent for the measure, which covers about 15 percent of Europe’s third-largest economy, according to the median estimate in a Bloomberg survey.
“While the slowdown is by no means a disaster, it will challenge the prevailing market views that the Bank of England will raise interest rates at some stage towards the end of this year,” said Azad Zangana, an economist at Schroders Plc in London, which oversees about $416 billion.
The volume of shares changing hands in FTSE 100-listed companies was 37 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.
Glencore (GLEN) rose 2.9 percent to 318.8 pence. Barclays upgraded the commodities producer based in Baar, Switzerland to overweight from equal weight, forecasting that the the company will generate four times more earnings per dollar of capital expenditure than its nearest rival over the next three years.
Randgold Resources Ltd. advanced 2.9 percent to 3,712 pence, its first gain in six days. Anglo American Plc (AAL) climbed 1.9 percent to 1,249.5 pence. Copper rose 1.2 percent and nickel climbed 3.6 percent on the London Metal Exchange. The FTSE 350 Mining Index increased 1.4 percent.
Tullow jumped 7.6 percent to 909.5 pence, its biggest gain since September 2011. Statoil, Norway’s national oil company, has analyzed Tullow as a potential takeover target, one of the people familiar with the matter said late yesterday.
IMI rose 2.3 percent to 1,563 pence. Bank of America raised its recommendation on shares of the engineering company to buy from neutral. The brokerage said a new chief executive officer may improve long-term growth.
Cineworld Group Plc (CINE) rallied 13 percent to 443.5 pence, its biggest rally since January 2008. The company said that it will merge with the movie-theater business of Poland’s Cinema City International NV. Cineworld said that it expects to complete the transaction in March.
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