U.K. stocks climbed the most in four weeks as a business lobby group forecast the economy may avoid another recession and Vodafone Group Plc shares surged amid takeover speculation.
Vodafone, the second-biggest stock in the FTSE 100, rallied to a five-year high as the Financial Times’s Alphaville blog said AT&T Inc. and Verizon Communications Inc. may jointly bid for the mobile-phone company. FirstGroup Plc jumped the most in four years after Bank of America Corp. upgraded the the U.K.’s largest rail operator.
The FTSE 100 gained 78.92 points, or 1.2 percent, to 6,490.66 at the close in London, the largest advance since March 5. The equity benchmark gained 8.7 percent in the first quarter as U.S. lawmakers agreed on a compromise budget and reports on jobs and housing fueled optimism that the world’s biggest economy is recovering. The FTSE All-Share Index and Ireland’s ISEQ Index each added 1.2 percent today.
“Investors are coming into this month with upbeat expectations rather than downbeat ones,” said Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England. “The FTSE’s performance this year has been pretty good. U.S. markets are performing very strongly, and the U.K. survey data came in better than expected.”
The British Chambers of Commerce said its gauges of domestic and foreign demand at manufacturers and services companies rose last quarter, with export measures near records.
“Fears of another recession are calmed by our results,” BCC Chief Economist David Kern said. “The economy’s performance is weak by long-term historical standards. However, while remaining below trend for some time, growth is likely to stay in positive territory.”
Still, a release today showed U.K. manufacturing contracted more than forecast last month. A gauge of activity rose to 48.3 in March from 47.9 in February, Markit Economics and the Chartered Institute of Purchasing and Supply said. Economists in a Bloomberg survey had forecast an increase to 48.7. A reading above 50 signals expansion.
Vodafone rallied 2.9 percent to 192 pence, the highest price since November 2007, as Alphaville reported that AT&T and Verizon are working on a joint offer for the U.K. company. The blog cited unidentified people.
Vodafone spokesman Matt Morgan declined to comment on the report. Verizon Wireless spokesman Torod Neptune didn’t immediately return a call seeking comment before regular business hours. An AT&T spokesman in London declined to comment.
FirstGroup jumped 7.5 percent to 216.1 pence, the biggest gain since April 2009. Bank of America upgraded the shares to buy from underperform, saying that contract extensions and divestments may give the shares a 20 percent boost.
A gauge of oil and gas companies listed on the FTSE 350 Index climbed 1.1 percent. BG Group Plc increased 2.3 percent to 1,154.5 pence and Salamander Energy Plc rallied 5 percent to 218.1 pence.
ICAP Plc, the world’s largest broker of transactions between banks, soared 6.1 percent to 308.1 pence, the biggest gain since Sept. 7. Nasdaq OMX Group Inc. agreed yesterday to buy eSpeed, the electronic trading system for U.S. Treasuries, from BGC Partners Inc. for about $750 million in cash.
Evraz Plc slipped 2.5 percent to 216.5 pence after saying it will buy 51 percent of OJSC Timir, an iron-ore project in the southern part of Yakutia in Russia, for about $160 million.