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U.K. Stocks Rise to Six-Month High; Debenhams, BT Group Climb

Oct. 21 (Bloomberg) -- U.K. stocks rose to their highest level since April amid optimism that earnings growth in the third quarter is underpinning a recovery in the global economy.

Debenhams Plc soared 7 percent as the retailer reported higher pretax profit as its online sales climbed. BT Group Plc rallied 4.1 percent as concern faded about the company’s pension plan. Britvic Plc rallied 5.7 percent after the maker of Tango soda and Robinson’s drinks reported a surge in sales.

The benchmark FTSE 100 Index gained 28.93, or 0.5 percent, to 5,757.86 at the 4:30 p.m. close in London. The gauge has risen 3.8 percent this month amid speculation that central banks will ease monetary policy further to support the economic recovery. The FTSE All-Share Index also advanced 0.5 percent today and Ireland’s ISEQ Index added 3.1 percent.

“The climate for equities has improved rather significantly and valuations are rather compelling,” Andrew Popper, chief investment officer at SG Hambros Bank Ltd. in London, said in a Bloomberg Radio interview. “The earnings are very, very good. We are buying equities.”

Debenhams surged 7 percent to 76.5 pence as the U.K.’s second-biggest department-store chain said profit before taxes and exceptional items rose to 151 million pounds ($237.7 million) from 125.2 million pounds a year earlier as it added more profitable designer labels and shoppers bought more products online.

BT, Britvic Rally

BT gained 4.1 percent to 156.3 pence. The U.K. government lost a court fight to limit its liability for BT’s employee pension plan if Britain’s largest phone company were to collapse.

“This should support our view that the pension issues facing BT are a reducing concern,” JPMorgan Chase & Co. analyst Paul Howard wrote in a report today. He maintains his “overweight” recommendation on the shares.

Britvic rallied 5.7 percent to 497.3 pence. The drinks maker said full-year sales rose 15 percent as fiscal fourth-quarter revenue climbed 33 percent.

Tullow Oil Plc slid 2.1 percent to 1,227 pence. The oil exploration company said its Onyina-1 exploration well in the Deepwater Tano license off the coast of Ghana encountered water-bearing reservoirs.

TUI Travel Plc tumbled 11 percent to 205 pence. The company’s audit for the full-year ended September 2009 identified a further 88 million pounds of irrecoverable balances that it needs to write off, giving a total writedown of 117 million pounds, the company said in a statement. Paul Bowtell, its chief financial offer, will leave the company at the end of this year.

GlaxoSmithKline Plc lost 1.3 percent to 1,275 pence as the U.K.’s largest drugmaker said third-quarter profit showed little change, held back by costs tied to the Avandia diabetes treatment and generic competition to its Valtrex medicine.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

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

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