U.K. Stocks Increase as RBS Leads Advances in Bank Shares

U.K. stocks advanced for a second day as investors speculated that banks’ fourth-quarter performance will justify further gains in stock prices.

Royal Bank of Scotland Group Plc (RBS) gained 3.1 percent after policy makers made concessions to lenders on minimum-capital rules. Barclays Plc and Aberdeen Asset Management Plc (ADN) also advanced. Wm Morrison (MRW) Supermarkets Plc surged the most since July 2009 after reports the company may sell property. Tullow Oil Plc (TLW) lost 3.5 percent after jumping 6.3 percent last week.

The FTSE 100 Index (UKX) added 17.21 points, or 0.3 percent, to 6,757.15 at the close of London trading. The gauge rose last week after data showing a slowdown in U.S. job creation fueled speculation the Federal Reserve won’t rush to trim bond buying. The broader FTSE All-Share Index (ASX) also climbed 0.3 percent, while Ireland’s ISEQ Index added 1.1 percent.

Earnings will increasingly become important to investors in 2014 as they shift focus from the Fed’s stimulus policy, Craig Erlam, a market analyst at Alpari U.K. Ltd. in London, wrote in a note to clients. As the central bank starts to trim bond purchases, company fundamentals would have to improve to drive further gains, he said.

Investors “will no longer have the distraction of ultra-loose monetary policy,” Erlam wrote. “The focus this week, with respect to earnings, will be on the financial sector. This is expected to be the best-performing sector.”

RBS, Barclays

Royal Bank of Scotland rose 3.1 percent to 368 pence, while Barclays Plc (BARC) gained 2.9 percent to 291.7 pence and Aberdeen Asset Management advanced 1 percent to 459.9 pence.

The Basel Committee on Banking Supervision eased some rules linked to the leverage ratio, the capital banks must own as a proportion of total lending, amid concern tighter rules may curb credit growth. While the oversight body amended how banks must calculate the size of their assets, it didn’t change the percentage of their own funds needed to meet the rule, which stays at 3 percent.

Morrison climbed 6.4 percent to 251.3 pence. Activist investors including U.S. hedge fund Elliot Associates have built a stake in the retailer and are pressing it to overhaul its property portfolio, the Financial Times reported Jan. 11. The Sunday Times reported yesterday that the company may seek to raise 800 million pounds from property disposal.

Tullow Oil fell 3.5 percent to 878 pence as the price of oil fell. Tullow rallied 6.3 percent last week after people familiar with the matter said that Norway’s Statoil ASA has studied buying the oil-and-gas explorer.

Sports Direct International Plc, the U.K.’s largest sports retailer, lost 1.1 percent to 747.5 pence after saying it bought a 4.6 percent stake in Debenhams Plc. Debenhams rallied 5 percent to 85.65 pence.

To contact the reporter on this story: Trista Kelley in London at tkelley2@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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