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U.K. Stocks Extend 4 1/2-Year High; Vodafone Shares Rally

Jan. 24 (Bloomberg) -- U.K. stocks climbed for a second day, extending the highest level for the FTSE 100 Index since May 2008, as Chinese manufacturing expanded and U.S. jobless claims unexpectedly fell.

Vodafone Group Plc rallied 3.2 percent after David Einhorn’s Greenlight Capital Ltd. raised its stake in Europe’s largest mobile-phone company. EasyJet Plc added 5.1 percent after revenue jumped in the first quarter. ICAP Plc lost 1 percent after saying U.K. regulators are investigating it as part of a probe into interest-rate manipulation.

The benchmark FTSE 100 Index rose 67.27 points, or 1.1 percent, to 6,264.91 at the close in London as all but 22 stocks gained. The gauge has rallied 6.2 percent so far this year after U.S. lawmakers agreed on a compromise budget. The broader FTSE All-Share Index also advanced 1.1 percent today, while Ireland’s ISEQ Index increased 1.5 percent.

“The FTSE 100 is clearly gaining the attraction of risk-loving investors looking to gain exposure to equities,” said Angus Campbell, head of market analysis at Capital Spreads in London.“The buying was also spurred on by a great deal of economic data from around the globe that was supportive of stocks.”

In China, manufacturing expanded at the fastest rate in two years, according to a survey of companies by Markit and HSBC Holdings Plc. A measure of euro-area services and manufacturing output contracted at a slower pace this month than economists had estimated. In the U.S., first-time jobless claims unexpectedly dropped last week to 330,000, the fewest since the corresponding week in 2008, the Labor Department reported in Washington.

Vodafone Stake

Vodafone, which has a 5.2 percent weight in the FTSE 100, increased 3.2 percent to 168.65 pence. David Einhorn’s hedge fund Greenlight said in a letter dated Jan. 22 that they had increased their stake in the company, citing Vodafone’s stake in Verizon Wireless.

“After achieving an August peak of 192 pence, the shares ended the year at 154 pence,” Greenlight wrote in its letter. “At this valuation, it appears that the market is placing no value on Vodafone’s 45 percent stake in Verizon Wireless. The Verizon Wireless stake is clearly quite valuable.”

EasyJet Revenue

EasyJet gained 5.1 percent to 898.5 pence after Europe’s second-largest discount carrier reported a 9.2 percent jump in first-quarter sales to 833 million pounds ($1.32 billion) as competitors trimmed capacity and the airline added flights to Switzerland and France.

The airline also said its first-half 2013 pretax loss will be 50 million pounds to 75 million pounds. Deutsche Bank AG has estimated a loss of 109 million pounds.

Shares of rival discount airline Ryanair Holdings Plc rallied 2.7 percent to 5.40 euros in Dublin.

Croda International Plc climbed 3.4 percent to 2,437 pence as JPMorgan Chase & Co. reiterated its overweight recommendation, the equivalent of a buy rating, saying the chemical maker is on track to please investors with a “positive start” in 2013.

Severn Trent Plc and United Utilities Group Plc added 1.9 percent to 1,635 pence and 4.2 percent to 747.5 pence, respectively, after Bank of America Corp. upgraded both companies to neutral from underperform, saying key threats to the U.K. water industry, including from license reforms by the Water Services Regulation Authority, or Ofwat, have receded.

Pearson Plc advanced 1.6 percent to 1,187 pence after Barclays Plc raised its recommendation for the shares to equal weight, a rating similar to hold, from underweight.

ICAP, the world’s biggest broker of transactions between banks, fell 1 percent to 324 pence. The shares lost as much as 5.9 percent as the company said one of its interdealer-broker subsidiaries has been notified that it is the subject of an investigation by the Financial Services Authority.

Earlier, the Financial Times reported that the regulator is examining whether the company helped manipulate the London Inter-Bank Offered Rate for the Japanese yen and U.S. dollar.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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