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U.K. Stocks Rise on Federal Reserve Stimulus; BHP Billiton Gains

Nov. 4 (Bloomberg) -- U.K. stocks rose, sending the FTSE 100 Index to its highest level since June 2008, after the U.S. Federal Reserve said that it will buy $600 billion of bonds to boost the economy.

BHP Billiton Ltd. rallied 6.6 percent to a record price in London after Canada blocked the world’s largest mining company’s $40 billion hostile takeover bid for Potash Corp. of Saskatchewan Inc. Man Group Plc soared 15 percent and Unilever climbed 6.3 percent after profit topped estimates. Rolls-Royce Group Plc sank 5 percent after one of its engines exploded in mid-flight, forcing Qantas Airways Ltd. to ground its Airbus SAS A380 fleet.

The benchmark FTSE 100 Index surged 113.82, or 2 percent, to 5,862.79 at the 4.30 p.m. close in London. The measure rallied 2.3 percent last month as investors anticipated that the Fed would kick off a second round of asset purchases, a tactic known as quantitative easing. The FTSE All-Share Index climbed 1.9 percent and Ireland’s ISEQ Index rose 1.6 percent today.

“We think QE2 is going to be more effective than investors realize,” Andrew Garthwaite, the London-based head of global equity strategy at Credit Suisse Group AG, wrote in a report. “We stay overweight equities.”

The Fed will purchase about $75 billion a month through June. The central bank added that it will “adjust the program as needed.” Most economists surveyed by Bloomberg predicted policy makers would add at least $500 billion to the financial system. The central bank also left unchanged its pledge to keep interest rates low for an “extended period.”

Bank of England

The Bank of England kept the size of its emergency stimulus program unchanged as the strength of the U.K. recovery persuaded officials not to join the Fed in buying more government bonds.

BHP Billiton surged 6.6 percent to 2,430 pence. Canada’s Prime Minister Stephen Harper said yesterday that selling the world’s largest fertilizer company wouldn’t provide a “net benefit” to the nation. BHP Chief Executive Officer Marius Kloppers obtained $45 billion of loans in September to fund the proposed $130 a share acquisition, which met opposition from politicians and investors.

Man Group soared 15 percent to 290.8 pence, its highest price since Jan. 15, after the biggest publicly traded hedge-fund manager posted per-share earnings for the first half of 10.2 cents, topping a 9.5 cents a share projection from its trading statement on Sept 28. Credit Suisse Group AG analyst Rupak Ghose increased his price estimate on the shares 12 percent to 290 pence.

Unilever Climbs

Unilever gained 6.3 percent to 1,924 pence. The consumer products maker reported third-quarter volume growth that beat estimates as customers bought more deodorants and ice cream in western Europe.

Rolls Royce lost 5 percent to 621.5 pence. One of four Rolls Royce engines on a Qantas A380 airplane failed during a Singapore-Sydney flight today, scattering debris over an Indonesian island. The plane, carrying 433 passengers and 26 crew, landed safely.

William Morrison Supermarkets Plc, the smallest of the U.K.’s four main food retailers, lost 3.9 percent to 278.7 pence after Richard Pennycook, the company’s finance director, said on a call with journalists that consumer pressures “show no signs of easing.”

“By Morrison’s standards, the update is fairly anaemic, with a combination of higher food price inflation and consumer caution providing headwinds,” Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers in London, said.

Next Plc lost 2.2 percent to 2,133 pence as JPMorgan Chase & Co. downgraded the shares to “underweight” from “overweight.”

“We expect Next to suffer disproportionately as price increases further reduce store volumes,” analyst Gillian Hilditch wrote in a report today.

Cable & Wireless Communications Plc plummeted 13 percent to 46.99 pence, the biggest drop since October 2005. The company reported profit and sales that missed estimates and analysts called the company’s cash flow “miniscule.”

To contact the reporter on this story: Adam Haigh in London at

To contact the editor responsible for this story: David Merritt at

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