March 1 (Bloomberg) -- U.K. stocks climbed, erasing losses an hour before the close of trading, as a rally in companies from Capita Group Plc to Old Mutual Plc outweighed an unexpected contraction in British manufacturing and mortgage approvals.
Capita, which provides services for U.K. government departments, rallied to the highest price on record as Goldman Sachs Group Inc. recommended the shares. Old Mutual jumped the most in eight months as earnings topped estimates. William Hill Plc jumped the most in 3 1/2 years after saying it will take full control of its online betting operation. Lloyds Banking Group Plc fell after reporting a full-year loss.
The FTSE 100 Index gained 17.79 points, or 0.3 percent, to 6,378.6 at the close in London, after earlier falling as much as 0.8 percent. The gauge has increased 0.7 this week as the European Central Bank and the Federal Reserve signaled that monetary stimulus will continue, extending the rally so far in 2013 to 8.2 percent.
“We will see good growth this year,” Richard Lacaille, chief investment officer at State Street Global Advisors in London, told Francine Lacqua on Bloomberg Television. People have been “underestimating how much earnings can grow and how well investors can do by taking risk. Central bank policy is also very easy.”
The broader FTSE All-Share Index climbed 0.3 percent today, and Ireland’s ISEQ Index rose 0.1 percent. The volume of shares changing hands on the FTSE 100 was 58 percent greater than the average of the past 30 days,data compiled by Bloomberg show.
Stocks fell earlier after a gauge of U.K. manufacturing shrank in February. The index from Markit Economics and the Chartered Institute of Purchasing and Supply dropped to 47.9 from a revised 50.5 in January, where a number below 50 signals contraction. Economists in a Bloomberg survey had forecast a reading of 51.
Separate data from the Bank of England showed mortgage approvals unexpectedly fell in January, indicating continuing weakness in the housing market. Nationwide Building Society said the real estate recovery is “likely to be gradual” as accelerating inflation squeezes consumers.
The FTSE 100 pared losses as a report showed U.S. manufacturing expanded at a faster pace than forecast in February, reaching the highest level since June 2011.
Capita climbed 4.3 percent to 858.5 pence, the highest since at least 1989. Goldman Sachs reiterated its conviction buy rating and set a new share-price estimate of 1,120 pence after the company reported full-year results yesterday.
Old Mutual increased 4.4 percent to 211.4 pence, the biggest gain since June 6. Africa’s largest insurer reported an 18 percent advance in full-year operating profit to 1.61 billion pounds, topping the average analyst estimate of 1.57 billion pounds in a Bloomberg survey.
William Hill jumped 9.5 percent to 443.3 pence, the largest increase since October 2009. The U.K. operator of more than 2,300 betting shops said it will take full control of its online operation in a deal with Playtech Ltd. William Hill plans a 375 million-pound rights offer to fund the acquisition.
Playtech slipped 2.4 percent to 558 pence.
Hammerson Plc rose 2.5 percent to 506.5 pence. Britain’s third-largest real estate investment trust reported annual profit that beat estimates after rents grew more than expected.
Taylor Wimpey Plc gained 3.1 percent to 83.65 pence after the second-biggest U.K. homebuilder by volume said full-year net income more than doubled to 231.3 million pounds as the company sold more homes and increased prices.
Rival Persimmon Plc climbed 2.3 percent to 934.5 pence.
Lloyds dropped 2.2 percent to 53.25 pence after the U.K.’s largest mortgage lender reported a full-year loss of 1.43 billion pounds and set aside a further 1.5 billion pounds to compensate customers wrongly sold loans.
Royal Bank of Scotland Group Plc retreated 3.1 percent to 314 pence and Barclays Plc slid 1.1 percent to 303.45 pence.
Xstrata Plc led a gauge of mining companies lower, falling 3.1 percent to 1,127 pence as copper declined on the London Metal Exchange and Glencore International Plc said it won’t meet its March 15 takeover deadline because of the ongoing regulatory process and court timetable. Glencore shares fell 2.7 percent to 376.95 pence.
Rio Tinto Group dropped 2.8 percent to 3,442 pence as a person familiar said the world’s second-biggest mining company has offered its Canadian iron ore operations for sale.
Kazakhmys Plc slid 4.7 percent to 590 pence as Societe Generale SA downgraded the shares to sell from buy and Liberum Capital lowered its recommendation to hold from buy. Kazakhstan’s biggest copper producer tumbled 8.6 percent yesterday after saying annual profit fell 31 percent.
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