U.K. stocks advanced for a fourth day, as a rally in gold miners outweighed a decline in energy suppliers.
Randgold Resources Ltd. (RRS) added 2.4 percent and Fresnillo Plc (FRES) advanced 8.8 percent as gold prices rose. Barclays Plc (BARC) climbed 1.2 percent after reporting adjusted pretax profit for 2013 of 5.2 billion pounds ($8.5 billion). Centrica Plc slid 1.7 percent as the U.K.’s energy secretary wrote to regulators asking them to investigate whether the company is too profitable.
The FTSE 100 Index (UKX) climbed 19.87 points, or 0.3 percent, to 6,591.55 at the close of trading in London. The benchmark gauge last week rallied 0.9 percent as weaker-than-forecast payrolls and manufacturing data fueled speculation the Federal Reserve will refrain from immediate cuts to its bond-purchase program. The FTSE All-Share Index also added 0.3 percent today, while Ireland’s ISEQ Index lost 0.6 percent.
“Stocks’ current valuations and the Fed’s decision to reduce monetary stimulus do not loom as a hindrance to equity investors,” Luca Paolini, London-based chief strategist at Pictet Asset Management, wrote in a note. “While we expect developed-market stocks to deliver moderate returns of some five to 10 percent in 2014, we would consider any further weakness as a tactical opportunity to increase exposure.”
The benchmark FTSE 100 dropped 3.5 percent last month, the worst start to a year since 2010, pushing its valuation down to 13 times estimated earnings.
In the U.S., Fed Chairman Janet Yellen tomorrow delivers the semi-annual monetary policy report to the House Financial Services Committee. The central bank in January reduced its $85 billion of monthly bond buying by $10 billion and began cutting the purchases by the same amount this month. Policy makers next meet March 19-20.
Gold for immediate delivery rose 0.6 percent in London as Chinese buyers returned from a holiday. Volumes for the benchmark contract on the Shanghai Gold Exchange, which opened on Feb. 7 after the weeklong New Year break, climbed to the highest since May today. Separately, the China Gold Association said that demand for the precious metal in the country surged 41 percent to a record in 2013.
Randgold added 2.4 percent to 4,530 pence. Fresnillo, which produces gold and silver in Mexico, climbed 8.8 percent to 862.5 pence. African Barrick Gold Plc (ABG) surged 6.7 percent to 238.5 pence after HSBC Holdings Plc raised its rating on the shares to neutral from underweight, similar to sell. The bank cited better-than-forecast fourth-quarter production and the potential for improved medium-term profitability from engineering changes to the operation of Randgold’s Bulyanhulu mine in Tanzania.
Barclays gained 1.2 percent to 275 pence. Britain’s second-biggest lender posted profit that fell from 7.05 billion pounds in 2012 and missed the 5.4 billion-pound consensus analyst estimate compiled by the bank.
“If the miss is because of costs to achieve” the bank’s overhaul plan, “then we will take that as a positive,” said Vivek Raja, a banking analyst at Oriel Securities in London who rates the bank a buy. “Barclays would be accelerating the program and that should quell concerns about capital and the balance sheet.”
Centrica fell 1.7 percent to 308.9 pence. U.K. Energy Secretary Ed Davey told BBC Radio 4 that he has written to regulators, asking them to look at whether Centrica’s British Gas unit is too profitable.
“It looks like there could be a problem in the domestic gas supply market,” Davey said. “I want them to think radically: it’s an independent process –- they can choose to take no action or to take a full scale market investigation, and as I set out in my letter, there could be a number of remedies if they go down that route, including the break-up of some of these companies.”
The volume of shares changing hands in companies listed on the FTSE 100 was 7.1 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.
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