U.K. stocks rallied, with the benchmark FTSE 100 Index rebounding from a three-month low, after European Union leaders vowed to support Greece.
BHP Billiton Ltd. and Rio Tinto Group climbed more than 2 percent as mining companies across Europe advanced.
The FTSE 100 climbed 23.34, or 0.4 percent, to 5,697.72 at the 4:30 p.m. close in London, limiting a fifth straight week of losses. The FTSE All-Share Index today gained 0.5 percent, while Ireland’s ISEQ Index advanced 0.3 percent.
U.K. stocks yesterday sank to their lowest level since March 16 after U.S. Federal Reserve Chairman Ben S. Bernanke cut his growth forecast for the world’s largest economy. Since reaching this year’s peak on Feb. 8, the FTSE 100 has tumbled 6.5 percent as U.S. economic data trailed forecasts and concern mounted that Greece will default on its debt.
EU leaders vowed at a two-day summit in Brussels yesterday to stave off a default in Greece as long as the country’s Prime Minister George Papandreou pushes through a package of budget cuts next week. Greek lawmakers are due to vote on 78 billion euros ($111 billion) of austerity measures on June 30.
This “reassured markets that Greece will receive a bailout if George Papandreou manages to pass his austerity bill next week,” said Simon Furlong, a sales trader at SpreadEx Ltd. in St. Albans. “However, we are not out of the woods yet. With disappointing jobs figures in the U.S., Ben Bernanke downgrading U.S. growth output and a large opposition to austerity measures within Greece’s parliament, the light at the end of the tunnel is very dim indeed.”
German Business Confidence
U.K. stocks consolidated their gains after German business confidence unexpectedly improved in June, suggesting Europe’s largest economy is weathering the region’s worsening sovereign-debt crisis and slowing global growth. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, increased to 114.5 from 114.2 in May. Economists had forecast a drop to 113.4, the median of 39 estimates in a Bloomberg News survey showed.
Rio Tinto rallied 2.2 percent to 4,247.5 pence. BHP Billiton, the world’s largest mining company, advanced 2.5 percent to 2,300.5 pence.
Berkeley Group Holdings Plc rallied 11 percent to 1,254 pence, posting the biggest gain on the FTSE 250 Index, as the U.K.’s largest homebuilder by market value said annual profit rose 19 percent as the company sold more homes at higher prices. Berkeley also said it will pay shareholders dividends of 1.7 billion pounds ($2.7 billion) over the next decade.
RAB Capital Plc soared 18 percent to 9.6 pence as the London-based hedge fund proposed that it delists, offering shareholders 10 pence cash per share or shares in a new company.