May 24 (Bloomberg) -- U.K. stocks advanced, snapping three days of losses for the FTSE 100 Index, as a rally in mining shares overshadowed a drop in BP Plc.
Rio Tinto Group climbed 1.7 percent along with metals prices. SABMiller Plc rose after its Chinese partner said profit jumped almost ninefold. Prudential Plc gained 2.5 percent as it pushes ahead with its plan to take over American International Group Inc.’s AIA Group Ltd. BP extended losses as it continues to attempt plugging an oil leak in the Gulf of Mexico which has so far cost $760 million to clean up.
The benchmark FTSE 100 rose 6.68, or 0.1 percent, to 5,069.61. The FTSE All-Share Index gained 0.2 percent, while Ireland’s ISEQ Index declined 0.2 percent.
The FTSE 100 has dropped 13 percent from this year’s high on April 15 as concern rose that a sovereign-debt crisis in Europe is spreading. The declines came even as economic reports including U.K. factory production and U.S. retail sales beat estimates and European governments committed as much as 860 billion euros ($1.1 trillion) to support weak economies.
“The suggestion that this is simply an unwinding of over-exuberance is confirmed, in our opinion, by the current macro outlook,” wrote Chris Watling at Longview Economics, who told investors to sell equities on April 26 before moving his recommendation to “overweight” stocks. “Our medium term one-to-three month models are now generating convincing across the board ‘buy’ signals,” he said in a note today.
Rio Tinto, the world’s third-largest mining company, gained 1.7 percent to 2,959.5 pence. Anglo American Plc, which controls the world’s biggest platinum producer, gained 2 percent to 2,528 pence. Nickel, copper, zinc and lead advanced on the London Metal Exchange.
SABMiller, the world’s second-biggest brewer, rose 2.5 percent to 1,908 pence. China Resources Enterprise Ltd. said first-quarter profit increased almost ninefold as its retail business improved and it made money selling some units.
Beer sales by volume at China Resources Snow Breweries, in which SABMiller holds a 49 percent stake, gained 10.4 percent to 1.73 million kiloliters in the first quarter, China Resources said in a statement. Sales of its bestselling Snow brand increased 16.1 percent to 1.55 million kiloliters.
Prudential rose 2.5 percent to 530 pence, the biggest gain on the FTSE 100. The company’s management gave an “upbeat presentation” about the planned takeover of AIA, according to Oriel Securities.
BP lost 2.7 percent to 493 pence, extending the decline since April 21 to 23 percent. The oil company said today it may try in the next few days to plug the oil leak by injecting heavy drilling fluids into an undersea well.
The so-called “top kill” operation involves “significant uncertainties” and isn’t guaranteed to succeed, the oil company said in a statement. It will be followed by cement to seal the well about 5,000 feet (1,524 meters) underwater.
Lonmin Plc, the world’s third-largest platinum producer, dropped 1.3 percent to 1,616 pence after saying it will need to boost toll refining to meet this year’s sales target.
The miner said it will take a further 25 to 30 days to bring the Number One furnace online following a leak, during which time Lonmin will increase toll refining to “over and above our current contractual commitments.” Toll refiners are paid an agreed fee to run a specified amount of raw material through a processing plant.
Imperial Tobacco Group Plc, the maker of Davidoff cigarettes, added 2.1 percent to 1,799 pence. The shares were raised to “buy” from “neutral” at Nomura Holdings Inc. after falling 10 percent in 2010.
“Although we see many of the concerns over low- to medium-term underlying profit growth, competition in the U.S., margins in the U.K., plain packaging and leaf cost inflation as justified, we believe these are more than reflected in the current stock price,” the Japanese bank wrote in a report.
Cranswick Plc advanced 4 percent to 827 pence, the biggest gain since February. The Hull, England-based foodmaker said net income rose 72 percent in the year ended March 31, paid a higher dividend from the previous year, and said it was “encouraged” by the start of the current year.
Bellzone Mining Plc surged 49 percent to 51.5 pence. The iron-ore company that listed in London last month rose to its highest after reaching a binding accord with China International Fund Ltd. over project financing.
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