May 24 (Bloomberg) -- U.K. stocks advanced for the first time in four sessions, led by mining companies, on optimism a five-week sell-off is unwarranted given the outlook for global economic growth.
Xstrata Plc and Kazakhmys Plc advanced more than 1 percent as metals prices rose in London. Chloride Group Plc gained after Britain’s largest maker of backup power equipment reported higher revenue.
The benchmark FTSE 100 Index rose 34.2, or 0.7 percent, to 5,097.13 as of 8:43 a.m. in London. The FTSE All-Share Index gained 0.7 percent, while Ireland’s ISEQ Index increased 1.3 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.
Europe’s credit crisis pushed the FTSE 100 last week to its lowest price relative to expected earnings in more than one year. The price-earnings ratio of London-based HSBC Holdings Plc, Europe’s biggest bank by market value, slipped below Greece’s EFG Eurobank Ergasias SA last week.
“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.
Xstrata, the world’s fourth-largest copper producer, gained 1.4 percent to 963.6 pence. Kazakhmys, operator of natural-resources mines in Central Asia, increased 2.6 percent to 1,142 pence.
Metals including copper and zinc rose in London gain on speculation Chinese policy makers will rein in efforts to cool the economy.
Chloride added 1.1 percent to 287.3 pence. The company said full-year sales rose to 336 million pounds. Financial Director Neil Warner said in a call the results show “strong progress.”
Cranswick Plc advanced 3.7 percent to 824.5 pence. The foodmaker said full-year net income rose 72 percent in the year ended March 31 to 32.6 million pounds.
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