U.K. Stocks Climb to Two-Month High as Data Boosts Confidence

U.K. stocks climbed for a third day, extending a two-month high for the benchmark FTSE 100 Index, as manufacturing data added to optimism the global economy can withstand Europe’s sovereign-debt crisis.

Kazakhmys Plc and Barclays Plc led mining and bank shares higher, rallying more than 5 percent on the first day of trading for 2012. Burberry Plc rose 4.9 percent after a report the Chinese government may announce measures to boost consumer spending. BAE Systems Plc advanced after winning an order.

The FTSE 100 soared 127.63, or 2.3 percent, to 5,699.91 at the close in London. That was the largest jump in more than a month and pushed the gauge to the highest level since Oct. 28. The broader FTSE All-Share Index also increased 2.3 percent today, and Ireland’s ISEQ Index added 2 percent.

“Shares in London have made a strong start to the new year as manufacturing data surprises,” said David Jones, chief market strategist at IG Index in London. The data has “galvanized mining shares, with gains across the board for the sector’s blue chips.”

Stocks climbed as separate surveys showed manufacturing in China and India improved in December, while Australian output expanded for the first time in six months. Other reports today showed production in American factories climbed to a six-month high last month and U.K. manufacturing shrank less than economists forecast.

U.S. Economy

The FTSE 100 advanced 1.1 percent last week after U.S. data showed business activity and home sales in the world’s largest economy increased more than forecast.

Mining shares rallied today as copper rose to a three-week high in London trading.

Kazakhmys, Kazakhstan’s biggest copper producer, jumped 9.5 percent to 1,015 pence, the largest gain since September. BHP Billiton Ltd. advanced 6.2 percent to 1,993 pence and Xstrata Plc climbed 5.6 percent to 1,032.5 pence.

Banks also advanced. Barclays gained 5.8 percent to 186.3 pence, Lloyds Banking Group Plc increased 4.4 percent to 27.04 pence and HSBC Holdings Plc rose 2.8 percent to 504.9 pence.

Burberry, which generates more than 30 percent of its revenue in the Asia Pacific region, rallied 4.9 percent to 1,243 pence. China National Radio said the Chinese Ministry of Commerce may announce fresh stimulus measures to boost domestic spending as early as this week, citing Shen Danyang, a spokesman of the ministry.

Marks & Spencer Group Plc gained 1.9 percent to 317 pence as Bank of America Corp. raised its recommendation for the retailer to “neutral” from “underperform.”

BAE Order

BAE Systems advanced 3.4 percent to 294.9 pence after the arms company said it won a 133 million-pound ($207 million) contract from the Brazilian Navy.

Elsewhere, Home Retail Group Plc surged 13 percent to 94.2 pence, the biggest rally since September 2008. About 14 percent of the retailer’s shares are out on loan, an indication of short-sellers’ interest, according to research firm Data Explorers. The stock tumbled 56 percent last year.

Afren Plc jumped 20 percent to 103.2 pence as the oil and gas producer said production was ahead of guidance. Credit Suisse Group AG raised its recommendation for the stock to “outperform” from “neutral.”

Talvivaara Mining Co. soared 28 percent to 255.3 pence, the largest increase since November 2008, after the Finnish nickel miner met its 2011 output target of 16,000 metric tons.