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U.K. Stocks Advance on Euro-Area Optimism; Banks, Insurers Rally

U.K. stocks climbed to their highest level in more than two months, led by a rally in financial and mining companies, amid growing optimism that euro-area policy makers will contain the region’s debt crisis.

Barclays Plc and Aviva Plc both jumped more than 5 percent in London trading. Antofagasta Plc and Randgold Resources Ltd. climbed with metal prices. Burberry Group Plc gained 3.5 percent after the retailer posted sales that topped analysts’ estimates.

The benchmark FTSE 100 Index gained 46.1, or 0.9 percent, to 5,441.8 at the 4:30 p.m. close in London, its highest level since Aug. 3. The gauge earlier fell as much as 0.9 percent. The FTSE All-Share Index gained 1 percent, while Ireland’s ISEQ Index rose 1.9 percent in Dublin.

“The bias in the market does appear to be on the upside,” said Yusuf Heusen, a sales trader at IG Index in London. “With sentiment turning positive for now -- and evidence that there’s an awful lot of uninvested cash out there -- further gains may follow.”

Stocks climbed as European Commissioner for Economic and Monetary Affairs, Olli Rehn, said the region is moving toward a consensus on resolving the “calamity.” Slovakia, the only country that hasn’t ratified a revised bailout fund, will hold a second vote on Oct. 14 at the latest after failing to approve the European Financial Stability Facility yesterday.

Barroso Speech

European Commission President Jose Barroso called for a reinforcement of crisis-hit banks, the payout of a sixth loan to Greece and a faster start for a permanent rescue fund to master Europe’s debt woes.

“Reactive and piecemeal responses to different aspects of the crisis are no longer sufficient,” Barroso told the European Parliament in Brussels today. “We now need to get ahead of the curve.”

Barclays led banks higher, rallying 6.4 percent to 187 pence, while Royal Bank of Scotland Group Plc advanced 2 percent to 25.81 pence. Insurers Aviva Plc and Prudential Plc climbed 5.6 percent to 343.5 pence and 3.7 percent to 636.5 pence, respectively.

Antofagasta paced mining shares higher, jumping 6.9 percent to 1,151 pence as copper gained in London. Kazakhmys Plc climbed 5.5 percent to 932 pence and Vedanta Resources Plc rose 4.1 percent to 1,263 pence.

Copper rose as shrinking Asian inventories of the metal signaled steady demand from the region, including China, the world’s largest consumer of the metal. Stockpiles in Asia monitored by the LME fell for a 21st session in 22. Regional inventories dropped for a fourth month in September.

Randgold Resources, Fresnillo

Randgold Resources jumped 2.9 percent to 6,595 pence as gold advanced in London. The shares also climbed after rival Fresnillo Plc raised its gold-output forecast.

Fresnillo’s shares still dropped, falling 2 percent to 1,665 pence after the world’s largest primary silver miner lowered its full-year output target.

Burberry climbed 3.5 percent to 1,308 pence. The U.K.’s largest luxury-goods maker reported fiscal second-quarter sales that beat analysts’ estimates and dispelled concern over slowing demand with plans to add 15 percent to its average retail space.

Revenue in the three months ended Sept. 30 rose to 463 million pounds ($730 million) from 382 million pounds a year earlier. That beat the average analyst estimate of 447.8 million pounds in a Bloomberg survey.

Travis Perkins, Man

Travis Perkins Plc jumped 8.9 percent to 865 pence after the U.K.’s biggest building merchant reiterated its full-year forecast. The company also said nine-month sales matched its estimates.

Man Group Plc, the world’s largest hedge fund manager, tumbled 6 percent to 156.3 pence after the net asset value of its flagship AHL Diversified fund fell 5.5 percent in the week through Oct. 10.

Premier Foods Plc tumbled 20 percent to 3.78 pence as analysts at Exane BNP Paribas cut their price estimate for the shares to 1 pence from 10 pence. Fitch Ratings also downgraded its long-term insurer default rating for the company to BB- from BB. Fitch has a negative outlook on the maker of Branston pickle.

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