U.K. Stocks Advance as Banks Rally on Basel; Mining Shares Rise

U.K. stocks rose for a fourth day, led by a rally in banks after regulators agreed a compromise on the amount of capital lenders must hold as they attempt to avert a repeat of the 2008 financial crisis.

Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc rallied more than 2 percent after the Basel Committee on Banking Supervision gave firms more time to comply with the new rules. Xstrata Plc and Kazakhmys Plc advanced with metal prices while Prudential Plc jumped 3.1 percent amid speculation that Chinese investors might make a takeover offer for the insurer.

The benchmark FTSE 100 Index rose 63.89, or 1.2 percent, to 5,565.53 at the 4:30 p.m. close in London, extending last week’s 1.4 percent rally. The FTSE All-Share Index gained 1.1 percent to 2,872.73 and Ireland’s ISEQ Index climbed 1.1 percent to 2,811.26 today.

“European banks are turning a corner,” wrote London-based Andrew Stimpson, an analyst at Keefe, Bruyette & Woods in a report to clients. “The generous timelines around capital and funding rules have removed some of investors’ near-term fears. Most banks will reach the new requirements naturally.”

A gauge of bank shares jumped 1.7 percent to the highest in more than a month as KBW raised its recommendation for European lenders to “overweight”.

At a meeting in Basel, Switzerland yesterday, regulators said lenders will have to hold common equity equal to at least 7 percent of assets and gave them as long as eight years to comply in full. The U.S., U.K. and Switzerland had sought to give firms a maximum of five years to adopt the rules.

RBS, Lloyds, HSBC

RBS, the U.K.’s largest government-owned bank, gained 2.4 percent to 49.67 pence, while Lloyds increased 2.6 percent to 77.61 pence and HSBC Holdings Plc rose 2.5 percent to 677.9 pence.

Allied Irish Banks Plc jumped 4.8 percent to 78.3 euro cents in Dublin trading after Banco Santander SA agreed to buy the Irish lender’s 70 percent stake in Poland’s Bank Zachodni WBK for 2.94 billion euros ($3.76 billion) in cash.

Allied Irish said the sale will generate about 2.5 billion euros of Tier 1 equity capital toward meeting a 7.4 billion-euro target set by Ireland’s financial regulator.

Xstrata, Kazakhmys, Antofagasta

Xstrata, the world’s fourth-largest copper producer, increased 3 percent to 1,170 pence. Kazakhmys gained 5.2 percent to 1,352 pence and Antofagasta Plc rose 3.1 percent to 1,155 pence.

Copper climbed in London after China’s industrial output grew at a faster-than-estimated rate, boosting optimism that demand will expand in the world’s largest metals user. Aluminum, zinc and lead also rose on the London Metal Exchange.

Prudential jumped 3.1 percent to 618 pence after the Sunday Times reported that a group of Chinese investors are in the “early stages” of deciding whether to bid for the U.K. insurer. The newspaper didn’t say how it got the information.

The investors were among the backers of Prudential’s failed $35 billion bid for AIA Group Ltd., American International Group Inc.’s Asian arm, the Sunday Times said.

The following stocks also rose or fell in the U.K. and or Irish markets. Stock symbols are in parentheses.

Associated British Foods Plc (ABF LN) fell 16 pence, or 1.5 percent, to 1,072 pence after the company reported slower sales growth at its discount clothing chain Primark in the second half of the group’s fiscal year.

BAE Systems Plc (BA/ LN) rallied 10.2 pence, or 3.2 percent, to 333.1, climbing for a second day. Europe’s largest defense company plans to sell as much as $2 billion of assets that make hybrid propulsion systems for buses and trucks and flight controls for aircraft, two people with knowledge of the plan said.

The company today said in a statement that it has hired Wells Fargo & Co. and JPMorgan Chase & Co. to advise it on options, including a possible sale, for its platform solutions business.

CSR Plc (CSR LN) jumped 35.2 pence, or 11 percent, to 351 pence after the maker of chips used in Nokia Oyj mobile phones said it will buy back as much as $50 million of shares.

De La Rue Plc (DLAR LN) climbed 25.5 pence, or 3.8 percent, to 694.5 pence after BofA Merrill Lynch Global Research raised its recommendation for the world’s biggest printer of banknotes to “buy” from “neutral.”

Norkom Group Plc (NORK ID) sank 37 euro cents, or 30 percent, to 88 cents in Dublin after the company forecast sales for the six months through September of 22 million euros ($28.2 million) to 22.5 million euros. That’s down from 24.6 million euros a year earlier.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE