U.K. Stocks Rise First Time in Six Days After GDP Report

U.K. stocks rose for the first time in six days as Britain’s economy expanded last year by the fastest pace since 2007, outweighing data that showed an unexpected drop in U.S. durable-goods orders.

F&C Asset Management Plc (FCAM) jumped to a 5 1/2-year high as analysts predicted that Bank of Montreal’s offer to buy the company may attract a counterbid. Aberdeen Asset Management Plc (ADN) gained 3 percent, leading a gauge of European financial-services companies higher. ARM Holdings Plc dropped 1.4 percent as Apple Inc. missed estimates for quarterly sales of iPhones.

The FTSE 100 Index (UKX) advanced 21.67 points, or 0.3 percent, to 6,572.33 at the close of trading in London. The gauge tumbled 4.2 percent in the past five days as data signaled Chinese manufacturing may shrink this month and emerging-market currencies tumbled. The FTSE All-Share Index rose 0.5 percent today, while Ireland’s ISEQ Index added 1.6 percent.

“Since the good GDP results were released, performance has been focused on high beta sectors such as homebuilders and consumer goods,” James Butterfill, who helps manage about $50 billion as head of global equity strategy at Coutts & Co. in London, wrote in an e-mail. “We continue to prefer smaller businesses in the U.K. which are likely to continue to benefit from the improving economy.”

The U.K. economy expanded 0.7 percent in the fourth quarter, capping the best year since 2007 amid growth in every sector except construction, data showed. The increase in the gross domestic product followed a 0.8 percent gain in the third quarter, the Office for National Statistics. It was in line with the median forecast in a Bloomberg News survey of 39 economists.

U.S. Economy

In the U.S., orders for durable goods unexpectedly slumped in December by the most in five months. Bookings (DGNOCHNG) for goods meant to last at least three years dropped 4.3 percent after a 2.6 percent gain in November that was smaller than previously reported, Commerce Department figures showed. The median estimate in a Bloomberg survey called for a 1.8 percent advance.

A separate release may show the Conference Board’s consumer-confidence index slipped in January to 78 from 78.1 in December, according to the median economist estimate.

The Federal Reserve will begin its final two-day monetary policy meeting under Chairman Ben S. Bernanke today. He leaves his post on Jan. 31. The central bank will probably reduce its monthly bond purchases in $10 billion increments over the next six meetings before announcing an end to the program no later than December, according to a Bloomberg survey this month.

F&C Buyout

F&C advanced 6.1 percent to 123.5 pence. Bank of Montreal agreed to buy the manager of the oldest U.K. investment fund for 708 million pounds ($1.18 billion). The acquirer will pay 120 pence a share in cash. F&C shareholders will also receive their 2 pence dividend for 2013.

The deal may attract a counterbid, Canaccord Genuity Group Inc. said, citing the stock’s rally above the agreed offer and the time needed for regulatory approval. Numis Securities Ltd. said Bank of Montreal has not offered a big premium and hence a counterbid can’t be ruled out.

Aberdeen, Scotland’s largest fund manager, rose 3 percent to 403.2 pence.

Crest Nicholson Holdings Plc (CRST) climbed 0.8 percent to 355 pence. The property developer said its operating profit margin increased to 18.5 percent in the year through October 2013, from 18 percent in the previous year. Revenue increased 29 percent last year.

Lloyds Banking Group Plc, Britain’s biggest mortgage lender, advanced 3.1 percent to 82.85 pence. Royal Bank of Scotland Group Plc, which yesterday fell for a fourth day after disclosing more provisions for mortgages, gained 3.5 percent to 343.9 pence.

“Bargain hunters are moving in,” Marc Kimsey, a trader at Accendo Markets Ltd. in London, wrote. “We’re seeing traders rotating out of RBS as a result of yesterday’s trading update, hoping for better news from Lloyds.”

ARM (ARM) slid 1.4 percent to 944.5 pence. Apple sold 51 million iPhones in first quarter, missing analysts’ estimates of 54.7 million.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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

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