Jan. 23 (Bloomberg) -- U.K. stocks climbed, extending the FTSE 100 Index’s highest level since May 2008, as unemployment unexpectedly fell and Prime Minister David Cameron pledged to hold a referendum on Britain leaving the European Union.
Unilever gained 3.1 percent after the world’s second-largest consumer-goods maker reported sales that exceeded analysts’ estimates. BHP Billiton Ltd. rose 1.4 percent after forecasting annual output growth of 10 percent. TUI Travel Plc lost 4.8 percent after its majority owner, TUI AG, said it will not make an offer for the rest of the shares.
The benchmark FTSE 100 Index added 18.47 points, or 0.3 percent, to 6,197.64 at the close in London. The gauge has advanced 5.1 percent this year as U.S. lawmakers agreed on a compromise budget. The broader FTSE All-Share Index climbed 0.2 percent today, while Ireland’s ISEQ Index slipped 0.1 percent.
“There is more upside to go, people are willing to take more risk and there is more money coming back into the market which is encouraging,” said Justin Urquhart Stewart, who helps oversee about $6.8 billion at Seven Investment Management Ltd. in London. “It’s about time spent in the market, not timing the market, so you will see short-term volatility.”
Compass Group Plc and SSE Plc trade without the right to their latest dividends today, erasing 2 points from the FTSE 100. The volume of shares changing hands in the gauge’s companies was 19 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
Claims for unemployment benefits unexpectedly decreased by 12,100 to 1.56 million in December, the fewest since June 2011, according to the Office for National Statistics. The jobless rate for the quarter through November fell to 7.7 percent.
In a speech in London, Cameron described British backing for the status quo in Europe as “wafer thin.” The prime minister said he will put the U.K.’s continued membership of the EU to a popular vote by the end of 2017 if he wins a general election in two years’ time. Cameron said that he wants to negotiate the return of some powers to the U.K.
Stocks also rose after a measure of consumer confidence in the euro area climbed for a second month in January, adding to evidence that the combined economy of the 17 nations using the single currency may be emerging from its recession.
Unilever added 3.1 percent to 2,526 pence, its highest price since at least 1988, after reporting a 7.8 percent increase in quarterly revenue, led by increased sales in North and South America. The average estimate of 13 analysts polled by Bloomberg had called for growth of 6.2 percent. The quantity of goods sold rose 4.8 percent, more than the 4 percent estimated by analysts.
BHP Billiton advanced 1.4 percent to 2,110 pence after the company forecast 10 percent annual output growth through its fiscal year ending in 2014. The world’s largest mining company said iron ore, copper and petroleum production increased in the final three months of last year.
Afren Plc surged 9.2 percent to 152 pence amid speculation the owners of the Paipai-1 well in Kenya will soon release drilling results. The volume of shares changing hands was more than 10 times the three-month average, according to data compiled by Bloomberg. An external spokesman declined to comment when contacted by Bloomberg News today.
“Afren is up on high volume amid rumors of forthcoming results from the Paipai prospects in which Tullow Oil and Africa Oil also have a stake,” said Jawaid Afsar, a trader at Securequity Ltd. in Sheffield, England.
Tullow Oil, which operates the well, gained 3.5 percent to 1,195 pence.
TUI Travel retreated 4.8 percent to 278 pence after TUI AG, which owns a 55.47 percent stake, dropped a share-based takeover deal one week after confirming that the two companies had held preliminary talks.
TUI AG said a stock bid for TUI Travel would not be in its shareholders’ interest. The Hanover, Germany-based tour operator cannot make another approach for the U.K. business for six months under the country’s takeover rules.
U.K. housebuilders fell as JPMorgan Chase & Co. lowered its recommendation for the industry, saying investors should sell following the shares’ recent gains. Bovis Homes Group Plc dropped 1.9 percent to 618 pence, Barratt Developments Plc lost 3.6 percent to 218.4 pence and Redrow Plc slid 4.3 percent to 184 pence. All three companies were downgraded to underweight at JPMorgan, the equivalent of a sell rating.
Flybe Group Plc sank 4.8 percent to 47.1 pence as Europe’s biggest regional airline said it will eliminate about 300 jobs and reduce its divisions to two to save 35 million pounds ($55.5 million) in two years and restore profit. The company also confirmed its guidance for the full year.
Big Yellow Plc declined 3.6 percent to 368 pence after selling 10 million new shares, or 7 percent of its capital, to help reduce debt. JPMorgan Chase, the sole bookrunner, sold the shares through an accelerated book-build process.
Severfield-Rowen Plc sank 35 percent to 78 pence, its biggest tumble in more than nine years, after the company said Chief Executive Officer Tom Haughey has stepped down. The maker of structural steel said it will discuss its banking covenants with its lenders. Severfield-Rowen will also review its order book and update the market with the results.
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