U.K. stocks rallied the most in more than a week after euro-area leaders agreed to ease conditions on bailout loans to Spanish banks and pledged to spend $152 billion to stimulate the region’s economy.
CRH Plc and Wolseley Plc led construction-related shares higher, both climbing at least 4 percent. Vedanta Resources Plc and Antofagasta Plc climbed as copper surged. Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc rebounded from yesterday’s selloff.
The FTSE 100 Index surged 78.09 points, or 1.4 percent, to 5,571.15 at the close in London, extending its monthly advance to 4.7 percent, the biggest since October. The gauge has still lost 3.4 percent this quarter, erasing its gain for the year, as European Union policy makers struggled to contain the sovereign-debt crisis.
“The second quarter ends with some unexpected good news,” Ian Williams, a strategist at Peel Hunt LLP in London, wrote in a report to clients. “The European Union summit has at least agreed a short-term fix in permitting the EU’s rescue funds to intervene directly by buying sovereign debt and recapitalizing the banks without an impact on government deficits. It’s good enough for now.”
After 13 1/2 hours of talks ending at 4:30 a.m. in Brussels, the leaders of the 17 euro countries waived their governments’ preferred-creditor status on bailout loans to Spanish banks. They also opened the door to recapitalizing lenders directly using the European Stability Mechanism once the euro area sets up a single banking supervisor.
The broader FTSE All-Share Index rose 1.5 percent today, while Ireland’s ISEQ Index jumped 2.5 percent as Irish Prime Minister Enda Kenny said the burden on taxpayers may be eased by the EU agreement.
EU leaders discussed reducing the market pressure on Italy and Spain, by allowing them to access rescue loans without relinquishing control of their economies.
All but five companies on the FTSE 100 rose today as the EU leaders also agreed to a 120 billion-euro ($152 billion) plan to promote growth in the 27-nation bloc though infrastructure financing.
CRH, the world’s second-biggest building-materials maker, advanced 7.3 percent to 1,232 pence in London. Wolseley, the largest supplier of heating and plumbing products, jumped 4 percent to 2,377 pence.
A gauge of mining shares rallied 2.6 percent as copper advanced the most since November in London. Lead, nickel, tin and zinc also climbed.
Vedanta Resources surged 4.7 percent to 912 pence, Antofagasta gained 4 percent to 1,088 pence and Rio Tinto Group, the world’s third-largest mining company, climbed 3.6 percent to 3,019 pence.
Lloyds paced a rally in European banks, climbing 3.9 percent to 31.1 pence. RBS gained 4.3 percent to 215.3 pence and HSBC Holdings Plc, Europe’s largest lender, increased 0.5 percent to 561.1 pence.
A gauge of U.K. lenders tumbled 4.3 percent yesterday, with Barclays Plc slumping 16 percent, after the lender’s fines from falsifying London interbank-offered rate submissions sparked speculation more lawsuits will follow. Barclays extended its slide today, falling 1.7 percent to 162.85 pence.
Berkeley Group Holdings Plc climbed 3.2 percent to 1,409 pence after the homebuilder reported a 66 percent increase in annual profit to 158.5 million pounds ($249 million) as the company sold more properties at higher prices. Analysts had projected 156 million pounds, the average of three estimates compiled by Bloomberg.
“Demand for residential property in good locations in London and the Southeast remained strong throughout the year, attracting interest from both U.K. domestic and international buyers,” Berkeley said in a statement.
Rival housebuilder Persimmon Plc soared 6.8 percent to 609 pence. Taylor Wimpey Plc increased 5.6 percent to 47.78 pence, while Barratt Developments Plc surged 6.8 percent to 139.1 pence.
Pennon Group Plc dropped 1.9 percent to 762 pence, the worst performer on the FTSE 100. Suez Environnement Co. plunged to its lowest price in Paris since Europe’s second-biggest water utility held its initial public offering in 2008 after saying the “uncertain” economic outlook will crimp profit.
The volume of shares traded on the FTSE 100 was 18 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.