U.K. Stocks Rise as Japan Economic Growth Beats Estimates

U.K. stocks climbed, following two weeks of gains, as a report showed that Japan’s economy grew at a faster pace than forecast.

Capita Plc gained 1.2 percent after Numis Securities Ltd. upgraded the outsourcing company. Lloyds Banking Group Plc dropped 1.7 percent after setting a price range for shares in its TSB division that fell below the value of the assets.

The FTSE 100 Index (UKX) added 16.79 points, or 0.2 percent, to 6,875 at the close in London. The equity benchmark has rallied 6.6 percent from this year’s low on Feb. 4 amid increased mergers-and-acquisitions activity. The broader FTSE All-Share Index increased 0.2 percent today, while Ireland’s ISEQ Index advanced 0.3 percent.

“Economic momentum is positive and central banks are providing lots of support,” Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England, said in a telephone interview. “The U.K. market relies on global economic growth. If we get better data globally, then the stocks exposed to emerging markets will do well.”

The volume of shares traded in FTSE 100 companies was 40 percent lower than the 30-day average, according to data compiled by Bloomberg. Seven European markets including Norway, Denmark and Switzerland are closed today for a public holiday.

Japan’s Economy

A report showed Japan’s gross domestic product grew 1.6 percent in the first quarter, faster than the preliminary reading of 1.5 percent and the median economist estimate of 1.4 percent in a Bloomberg News survey. The economy expanded 6.7 percent at an annualized rate.

In China, exports rose 7 percent in May from a year earlier, the country’s customs administration said yesterday. That exceeded the 6.7 percent increase forecast by economists in a Bloomberg survey. Imports fell 1.6 percent, creating a trade surplus of $35.92 billion, the biggest in five years.

Capita, which runs contracts on behalf of the U.K. government, gained 1.2 percent to 1,143 pence. Numis raised its recommendation on the shares to buy from hold, saying that first-half earnings will probably climb 16 percent.

A gauge of household-goods and construction companies advanced 1.1 percent as Barratt Developments Plc and Crest Nicholson Holdings plc rose 2.5 percent to 375.9 pence and 3.3 percent to 345.8 pence, respectively. Exane BNP Paribas raised its recommendation on European personal and household-goods companies to overweight, which is similar to buy, from underweight, citing the industry’s growth potential.

Lloyds dropped 1.7 percent to 78.8 pence after saying it will sell shares in TSB Bank Plc to the public for 220 pence to 290 pence each. The final pricing will be announced on June 20. An initial public offering at the middle of the indicative range would give the lender a market value of 1.28 billion pounds ($2.2 billion), it said in a statement. At that price, TSB would trade below its book value, which reflects weak profitability, Oriel Securities Ltd. wrote in a note.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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

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