U.K. stocks climbed to the highest level in almost six months after minutes from last month’s Federal Reserve meeting showed U.S. policy makers are prepared to pump more cash into the economy to protect the recovery.
Fresnillo Plc advanced 3.3 percent as the world’s largest primary silver producer said output rose to a record. ARM Holdings Plc rallied 1.8 percent after Intel Corp.’s forecast for fourth-quarter sales topped analysts’ estimates. Standard Chartered Plc lost 1.7 percent after the bank said it plans to raise about 3.3 billion pounds ($5.2 billion) in a rights offer. Kesa Electricals Plc surged 9.5 percent on takeover speculation.
The benchmark FTSE 100 Index gained 85.76, or 1.5 percent, to 5,747.35 at the 4:30 p.m. close in London, the highest level since April 26. The FTSE All-Share Index rose 1.5 percent and Ireland’s ISEQ Index climbed 0.7 percent.
The FTSE 100 has rallied 20 percent since the start of July amid speculation the Fed will next month announce plans to stimulate economic growth as the recovery wanes. Minutes from the U.S. central bank published later yesterday showed policy makers “wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus.”
“Clearly the U.S. economy with its very high levels of debt needs as much quantitative easing to get it going again,” Andreas Utermann, the chief investment officer at the RCM unit of Allianz Global Investors, which manages about $1.1 trillion, said on Bloomberg Television’s Countdown with Francine Lacqua. “I’m probably slightly more bullish on equities than I was six months ago.”
Fresnillo rose 3.3 percent to 1,282 pence as output climbed to a record in the third quarter and the company said it expects to “slightly beat” its full-year output forecasts for gold and silver. Rival mining companies Xstrata Plc, Anglo American Plc, and Vedanta Resources Plc surged 4.4 percent to 1,300 pence, 5.4 percent to 2,884 pence and 5.9 percent to 2,347 pence, respectively.
Copper rose to a 27-month high on prospects for increased consumption of the metal from China. Reports today showed China’s foreign-exchange reserves increased by a record to $2.65 trillion at the end of September while a 25 percent jump in exports lifted its trade surplus to $16.9 billion.
ARM, the U.K. designer of chips that power Apple Inc.’s iPhone, gained 1.8 percent to 382.3 pence. Intel said revenue In the fourth quarter will be $11.4 billion, plus or minus $400 million. That compares with an average projection of $11.3 billion, according to data compiled by Bloomberg.
Kesa Electricals surged 9.5 percent to 165.3 pence, the most since April 2009, amid speculation that the operator of Comet electronics stores in the U.K. may be a takeover target.
Best Buy may make an offer, the Financial Times Alphaville column said, without saying whether it was referring to Best Buy Co. or Best Buy Europe, a joint venture between the Richfield, Minnesota-based company and Carphone Warehouse Group Plc. A spokesman for Kesa declined to comment.
Standard Chartered declined 1.7 percent to 1,876 after saying investors will be offered one new share at 1,280 pence for every eight they already own. Lenders are raising surplus capital as their regulators weigh whether to force the largest banks to hold more capital than the minimum level agreed by international regulators in Basel last month.
Barclays Plc, the U.K.’s third-biggest bank, dropped 0.9 percent to 292 pence.
The question now “is quite simply whether the Standard Chartered move is going to be the thin end of the wedge,” said Richard Hunter, the London-based head of U.K. equities at the stockbroker Hargreaves Lansdown Plc. “Barclays is potentially being seen as the next one that might need to make a similar announcement to improve their capital buffer.”
In the U.S., JPMorgan Chase & Co. became the first U.S. bank to report third-quarter results. The lender reported third-quarter profit of $1.01 a share, beating the 88-cent average estimate of analysts surveyed by Bloomberg.
Petrofac Plc gained 4.2 percent to 1,474 pence as Morgan Stanley raised its recommendation for the oilfield-services provider to “overweight” from “equal weight” and the U.S. government lifted its ban on deep-water drilling ahead of schedule.
Bodycote Plc rallied 9.1 percent to 301 pence. The supplier of metal-strengthening services said sales in the remainder of the financial year should be stable and it expects annual operating profit at the upper end of the range of analysts’ forecasts.
Man Group Plc gained 4.8 percent to 269 pence as the hedge-fund manager said the weekly net asset value of Man AHL Diversified Futures Ltd. was $40.56 at the close of business on Oct. 11, up 4.5 percent compared with the previous week’s close.
Hammerson Plc climbed 2.1 percent to 423.8 pence. Goldman Sachs Group Inc. raised its recommendation for the real estate investment trust to “conviction buy” from “neutral.”
Burberry Group Plc fell for the first time this week, losing 3 percent to 1,008 pence. The U.K.’s largest luxury retailer said annual profit will be in the “top half” of analysts’ estimates, disappointing those who expected upgrades after second-quarter sales beat their goals.