March 8 (Bloomberg) -- U.K. stocks rallied to the highest level in more than five years as reports showed that U.S. employers added more jobs, Chinese exports surged and Japan’s economy returned to growth.
Vodafone Group Plc rallied 3.2 percent as Bank of America Corp. reiterated its buy recommendation on the mobile-phone company. HSBC Holdings Plc led a rally in banks, climbing 2.6 percent. Evraz Plc, Russia’s largest steelmaker, jumped 5.6 percent for the biggest increase on the FTSE 100 Index.
The FTSE 100 rose 44.42 points, or 0.7 percent, to 6,483.58 at the close in London, the highest level since December 2007. The benchmark gauge has climbed 1.7 percent this week, the largest gain since January, as investors speculated that central banks will maintain stimulus measures.
“The U.S. labour market continues to grow at a robust pace,” Mads Koefoed, head of macro Strategy at Saxo wrote in e-mailed comments. “The economy continues to expand at a moderate pace despite the uncertainty.”
The broader FTSE All-Share Index gained 0.7 percent to the highest since October 2007 today, while Ireland’s ISEQ Index fell 0.1 percent. The volume of shares changing hands in companies on the FTSE 100 was 9.8 percent greater than the 30-day average, according to data compiled by Bloomberg.
The FTSE 100 is trading at 11.9 times estimated earnings, compared with an average valuation of 11.3 over the past seven years, according to data compiled by Bloomberg.
“By default, equities are the most attractive asset class,” Bob Parker, who helps oversee $406 billion as senior adviser at Credit Suisse Asset Management in London, told Manus Cranny on Bloomberg Television. “Valuations, despite the rally, are still reasonably cheap. If you look at the recent data out of Germany, America and Japan, we are seeing quite a significant acceleration.”
U.S. payrolls rose by 236,000 last month after a revised 119,000 gain in January, Labor Department figures showed. That beat the median economist forecast for an advance of 165,000 in a Bloomberg Survey. The jobless rate dropped to 7.7 percent, the lowest since December 2008.
In Asia, China’s exports exceeded economists’ forecasts, jumping 21.8 percent in February from a year earlier. Japan’s economy expanded at an annualized 0.2 percent in the fourth quarter, compared with a preliminary calculation that had shown a 0.4 percent contraction.
Vodafone increased 3.2 percent to 184.35 pence, the highest price since August. The stock has jumped 9.5 percent this week, the biggest gain since 2008, as people familiar with the situation said Verizon Communications Inc. is seeking to resolve its relationship with the U.K. company this year, weighing options that include ending its wireless venture with Vodafone or a full merger.
Bank of America reiterated its buy recommendation for Vodafone, saying the U.S. situation is now becoming clearer.
HSBC paced a rally in banks as government bond yields fell in Spain amid speculation the outlook for the euro area’s economy is improving. Europe’s largest bank climbed 2.6 percent to 737 pence, its highest close in more than three years. Barclays Plc rose 2.9 percent to 318.6 pence and Royal Bank of Scotland Group Plc added 1 percent to 306.2 pence.
Evraz jumped 5.6 percent to 267.5 pence as the shares passed through the 100- and 200-day moving averages.
Aggreko Plc lost 3.1 percent to 1,879 pence for the biggest decline on the FTSE 100. The world’s largest provider of mobile power supplies surged 10 percent yesterday after raising its dividend and forecasting an average double-digit revenue growth over the next five years.
Thomas Cook Group Plc sank 8.2 percent to 75.75 pence, the biggest drop in four months, with volume more than triple the three-month average. The U.K. tour operator is due to hold a capital markets day and give a trading update on March 13.
The “last capital markets day preceded a fall in the share price from 265 pence despite the group setting out a roadmap to increase” profit margins, Simon French, an analyst at Panmure Gordon & Co., wrote in a report today. “We expect the group will set similar medium-term margin targets, but are yet to be convinced that the outcome will be any different.”
Sportech Plc surged 19 percent to 108 pence, the biggest gain on the FTSE All-Share, after the U.K. gambling operator that has half its business in the U.S. won a tax claim worth more than 80 million pounds ($120 million).
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