U.K. Stocks Climb as U.S. Jobless Claims Decline

March 7 (Bloomberg) -- U.K. stocks advanced as U.S. initial jobless claims fell to a six-week low and European Central Bank President Mario Draghi said economic activity in the euro area may improve later this year.

Aggreko Plc surged in more than four years after raising its 2012 dividend and forecasting an average double-digit revenue growth over the next five years. IMI Plc jumped to the highest in at least 24 years after it announced a share buyback plan. Aviva Plc tumbled the most since March 2009 as the U.K.’s second-biggest life insurer cut its second-half dividend.

The FTSE 100 Index rose 11.52 points, or 0.2 percent, to 6,439.16 at the close of trading in London. The benchmark gauge has rallied 9.2 percent so far this year and jumped to a five-year high this week on optimism central banks around the world will continue with stimulus measures. The broader FTSE All-Share Index gained 0.2 percent today, while Ireland’s ISEQ Index added 0.1 percent.

“The weekly jobless numbers were better than expected but the trade balance was worse, so you can’t really draw too many conclusions from any of it,” said Michael Hewson, a market analyst at CMC Markets Plc in London. “The stock rally looks like it’s going to continue until such time that we get something investors can’t dismiss.”

The volume of shares changing hands in companies on the FTSE 100 was 27 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.

Jobs, Trade

U.S. initial jobless claims unexpectedly fell by 7,000 to 340,000 in the week ended March 2, the lowest since the period ended Jan. 19, according to the Labor Department in Washington. The median forecast of 50 economists surveyed by Bloomberg had called for an increase to 355,000. The four-week average dropped to a five-year low.

America’s trade deficit widened by 16.5 percent to $44.4 billion from 38.1 billion in December, Commerce Department figures showed today in Washington.

The ECB today predicted the euro-area economy will shrink 0.5 percent this year, more than the 0.3 percent contraction forecast three months ago.

Even so, Draghi said in Frankfurt the 17-nation economy should see economic activity picking up later this year.

“Later in 2013 economic activity should gradually recover, supported by a strengthening global backdrop and our accommodative monetary policy stance,” Draghi said after policy makers left their benchmark interest rate at 0.75 percent, a record low.

BOE Policy

In London, the Bank of England’s Monetary Policy Committee maintained its target for quantitative easing at 375 billion pounds ($562 billion). The decision was forecast by 29 of 39 economists in a Bloomberg News survey, with the remainder having predicted an expansion of at least 25 billion pounds.

Aggreko surged 10 percent to 1,939 pence, the most since 2008, after it proposed a 15 percent increase in the full-year dividend.

“At a group level, our expectation is that over the next five years, we should achieve -- on average and subject to year-on-year variation -- double-digit rates of growth in revenues, with margins and returns on capital in excess of 20 percent,”the world’s largest provider of mobile-power supplies said.

IMI, Schroders

IMI added 4.5 percent to 1,319 pence, the highest price since at least 1988, as it plans to buy back shares for 175 million pounds. The engineering company posted full-year pretax profit of 366 million pounds, beating analysts’ estimates of 357 million pounds.

Schroders Plc added 2.5 percent to 2,086 pence, its highest price since at least March 1991. Europe’s largest publicly traded money manager reported full-year net income of 283.2 million pounds, beating analysts’ estimates of 273.1 million pounds.

Cobham Plc rose 2.4 percent to 234.7 pence. The world’s largest maker of airborne-refueling kit reported full-year earnings of 22.6 pence a share, compared with analysts’ estimates of 21.1 pence. Chief Executive Officer Bob Murphy said the company has set aside 800 million pounds for civil-sector acquisitions to offset declining military sales.

Aviva tumbled 13 percent to 314.8 pence after saying it will pay a final dividend of 9 pence a share for 2012, down from 16 pence the previous year. That reduced the total for the year to 19 pence, less than the 25.4 pence average forecast by analysts in a Bloomberg survey.

National Express Group Plc plunged 11 percent to 204.5 pence after the rail and bus operator’s largest investor, Elliott Advisors, said it would sell half its stake.

Petropavlovsk Plc, a miner of gold in Russia, slumped 7.8 percent to 253.2 pence, its lowest level since December 2008. The stock was downgraded to reduce from buy at Nomura Holdings Inc.

To contact the reporters on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net; Tom Stoukas in Athens at astoukas@bloomberg.net

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