U.K. Stocks Climb, Led by Mining Companies; ARM Holdings Jumps

Aug. 31 (Bloomberg) -- U.K. stocks rose for a third day after greater-than-forecast U.S. consumer confidence sparked a rebound in mining companies and ARM Holdings Plc surged to the highest level in more than eight years.

Fresnillo Plc and Randgold Resources Ltd. jumped more than 2 percent as gold futures rose in New York. ARM rallied 8.6 percent, boosted by Intel Corp.’s purchase of Infineon Technologies AG’s wireless operations yesterday.

The benchmark FTSE 100 Index gained 23.66, or 0.5 percent, to 5,225.22 at the 4:30 p.m. close in London after U.K. markets were closed yesterday for a holiday. The gauge has lost 0.6 percent this month as U.S. data from durable-goods orders to home sales missed forecasts. The FTSE All-Share Index climbed 0.5 percent today, while Ireland’s ISEQ Index rose 1.3 percent.

“The U.S. consumer confidence figures have helped mitigate risk aversion, at least slightly,” said Ben Critchley, a London-based sales trader at IG Index. “While there is a sense that equities have a serious dose of pessimism priced in, it will take a jolt of unambiguously strong data to help markets make significant gains.”

Stocks erased earlier losses after confidence among U.S. consumers rose more than forecast in August. Separate figures showed home prices in 20 American cities also topped economists’ expectations in June.

Fresnillo, Randgold

Fresnillo, a silver and gold producer, gained 3.2 percent to 1,090 pence as gold futures climbed to a two-month high. Randgold Resources, a producer of the metal in West Africa, increased 2.6 percent to 6,080 pence.

Rio Tinto Group, the world’s third-largest mining company, also advanced, gaining 2.4 percent to 3,300 pence. BofA Merrill Lynch Global Research raised its recommendation for the shares to “buy” from “neutral.”

ARM, a U.K. designer of semiconductors used in Apple Inc.’s iPhone, soared 8.6 percent to 366.8 pence, the highest close since January 2002. Intel, the world’s largest chipmaker, yesterday agreed to buy Infineon’s wireless unit for about $1.4 billion, gaining a foothold in the mobile-phone business.

Didier Scemama, an analyst at Royal Bank of Scotland Group Plc, said in a report today that the transaction was “neutral to positive” for ARM. London-based Scemama cited Intel’s intention to “support ARM-based platforms” and plans to add Wireless 3G to its core notebook PC platform.

Irish Earnings

Irish Life & Permanent Plc rallied 4.3 percent to 1.45 euros in Dublin trading after the Irish lender said its first-half operating loss narrowed 80 percent to 10 million euros ($12.7 million).

Grafton Group Plc also advanced, climbing 5.6 percent to 2.69 euros. Ireland’s biggest builder’s merchant reported a first-half operating profit of 14.8 million euros and “improved trends” in revenue.

Kerry Group Plc rose 5.4 percent to 25.92 euros. Ireland’s largest food company raised its full-year earnings forecast after a “strong” performance so far in 2010.

Serco Group Plc paced declining shares in London, after BofA Merrill Lynch lowered its recommendation for the operator of London’s Docklands Light Railway to “neutral” from “buy.” The stock dropped 2.5 percent to 582 pence.

To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.