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U.K. Stocks Advance; FTSE 100 Posts Weekly Gain

U.K. stocks advanced to a 4 1/2-year high, posting a fourth straight weekly gain, as a report showed German business confidence increased, outweighing a bigger-than-forecast contraction by Britain’s economy.

EasyJet Plc, Europe’s second-largest discount carrier, advanced 5.2 percent. International Consolidated Airlines Group SA rose 2.1 percent after JPMorgan Chase & Co. raised its recommendation on the shares. Evraz Plc slid 2.3 percent after Bank of America Corp.’s Merrill Lynch unit lowered its recommendation on the stock. BHP Billiton Ltd. slipped 1.6 percent for the biggest drag on the FTSE 100 Index.

The benchmark FTSE 100 gained 19.54 points, or 0.3 percent, to 6,284.45 at the close in London, extending its advance this week to 2.1 percent. The volume of shares changing hands on the equity benchmark was 3.4 percent greater than the average of the last 30 days, according to data compiled by Bloomberg. The broader FTSE All-Share Index also added 0.3 percent today, while Ireland’s ISEQ Index rose 0.6 percent.

“It’s the euro zone, U.S. and Asia that really set the tempo for the stock market,” said Jacques Porta, who helps manage $627 million at Ofi Patrimoine in Paris. “In Germany the ZEW is good news. The countries in northern Europe fare better than those of southern Europe.”

Gross domestic product shrank by 0.3 percent in the final three months of 2012, according to the Office for National Statistics. The median economist estimate had called for GDP to contract by 0.1 percent. Economists define a recession as two consecutive quarters of declining economic output.

Triple Dip

The U.K.’s economy returned to growth in the third quarter of 2012 as the nation’s statisticians accounted for ticket sales for London’s Olympic Games in the three months through September. The Bank of England forecasts a slow recovery and Governor Mervyn King has said that policy makers will provide more stimulus to sustain growth if needed.

Britain has not had a triple-dip recession during peace time since at least 1920, according to data compiled by the National Institute of Economic and Social Research.

In Germany, a report showed that business confidence rose for a third month in January. The Ifo institute’s business-climate index, based on a survey of 7,000 executives, climbed to 104.2 in January from 102.4 in December. That was the highest since June. Economists had predicted the gauge would rise to 103, according to the median forecast in a Bloomberg survey.

Repaying LTRO

The European Central Bank said financial institutions will repay 137 billion euros ($184 billion) of its three-year loans on Jan. 30, the earliest available opportunity to return the funds. That compared with the median forecast of 84 billion euros in a Bloomberg News survey of economists.

EasyJet climbed 5.2 percent to 945 pence. UBS AG upgraded the stock to buy from neutral, saying that the airline’s first-quarter results led the brokerage to raise its earnings-per-share forecasts for 2013 and 2014. EasyJet’s shares jumped 5.1 percent yesterday after the company said sales increased in the three months through December.

IAG rose 2.1 percent to 223 pence. The stock was upgraded to overweight from neutral at JPMorgan, meaning that investors should buy the shares. The brokerage said it expects IAG to climb once its Iberia unit reaches an agreement with unions.

Iberia’s ground staff, cabin crew and pilots last month agreed to negotiate the terms of a restructuring plan.

Construction Market

Evraz lost 2.3 percent to 300 pence. The brokerage cut its recommendation on the steel maker to underweight from buy, citing Russia’s slowing construction market.

“We are cautious on Russian steel in 2013 with regard to both volumes and prices on the back of the decelerating domestic economy,” analyst Evgeny Olkhovich wrote in a note.

BHP Billiton, the world’s largest mining company, slipped 1.6 percent to 2,104 pence. Rio Tinto Group, the second-biggest mining company, also lost 1.6 percent to 3,518 pence. Eurasian Natural Resources Corp., a producer of ferro alloys and iron ore in Kazakhstan, slid 2.4 percent to 331.1 pence. A gauge of mining companies posted the biggest decline of the 19 industry groups in the benchmark Stoxx Europe 600 Index.

Avocet Mining Plc tumbled 8.9 percent to 59 pence. The company said fourth-quarter gold output from its Inata mine in Burkina Faso fell 33 percent.

RusPetro Plc soared 5.6 percent to 49.5 pence after the producer of oil in Siberia said it will strengthen its finances. The company said it will sell secured notes to repay Sberbank loans and fund field development.

Polymetal International Plc gained 2.4 percent to 1,116 pence after UBS raised the stock to buy from neutral. Billionaire Mikhail Prokhorov’s Onexim Holdings Ltd. agreed to sell its stake in Polyus Gold International Ltd., said three people with knowledge of the plan on Jan. 24. Polyus may merge with Polymetal after the sale, according to Uralsib Capital.

“We think that now is the right moment to use weakness in the stock price as the potential merger with Polyus Gold may be a strong driver,” the analysts wrote in a note.

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