April 9 (Bloomberg) -- U.K. stocks advanced for a second day, led by commodity producers, as manufacturing rose more than forecast, Alcoa Inc. began the U.S. earnings season with profit that beat projections and Chinese inflation eased.
Rio Tinto Group, Eurasian Natural Resources Corp. and Kazakhmys Plc climbed more than 4.5 percent, pulling the FTSE 350 Mining Index to the biggest gain in three months. Vedanta Resources Plc rallied 5.3 percent after its Cairn India Ltd. unit found oil in a new well.
The FTSE 100 Index increased 36.27 points, or 0.6 percent, to 6,313.21 at the close of trading in London. The gauge has rallied 7 percent this year as U.S. lawmakers agreed on a compromise budget and data fueled optimism the world’s biggest economy is recovering. The broader FTSE All-Share Index also advanced 0.6 percent and Ireland’s ISEQ Index rose 0.5 percent.
“We’ve had a period of some weeks where commodity prices have been falling; it looks like we’re beginning to see a reversal of that as China comes back into the market and demand and confidence comes in again,” John Meyer, a partner at SP Angel, a London-based broker and adviser, told Francine Lacqua on Bloomberg Television. “Right now, you’re going to get better performance out of the stocks rather than the commodities themselves.”
The volume of shares changing hands in FTSE 100-listed companies was 26 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.
U.K. manufacturing rose twice as much as economists forecast in February as it rebounded from a slump during snow the previous month. Factory output increased 0.8 percent from January, when it fell a revised 1.9 percent, the Office for National Statistics said. The median forecast of 29 economists in a Bloomberg survey was for a gain of 0.4 percent.
Alcoa, the largest U.S. aluminum producer, said late yesterday that earnings excluding one-time items were 11 cents a share in the first quarter, beating the 8 cent-average analyst forecast. Revenue trailed projections.
Profits at companies in the Standard & Poor’s 500 Index may contract 1.8 percent in the first quarter, the first drop since 2009, analyst estimates compiled by Bloomberg show.
Inflation in China eased more than forecast, reducing pressure on policy makers to tighten credit, as the world’s second-largest economy recovers from a slowdown. The consumer price index rose 2.1 percent in March from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.5 percent median estimate in a Bloomberg survey of economists.
Rio Tinto added 4.8 percent to 3,135 pence as copper and lead increased on the London Metal Exchange. ENRC and Kazakhmys, which mine in Kazakhstan, rallied 5.1 percent to 260 pence and 5.6 percent to 393.50 pence, respectively. BHP Billiton Ltd., the world’s largest mining company, rose 3.5 percent to 1,944 pence, the biggest advance since Jan. 2.
Ferrexpo Plc soared 19 percent to 184.9 pence, the largest jump since July 2009. The Ukrainian iron-ore producer said first-quarter pellet production from its own ore gained 10 percent from a year earlier.
UBS AG said this year’s selloff in U.K. mining shares, driven by concern about China’s policy makers tightening credit and the U.S. Federal Reserve ending monetary easing, sets up a buying opportunity.
Vedanta rose 5.3 percent to 1,116 pence, its highest price in three weeks. Cairn India, which Vedanta acquired for $8.67 billion in 2011, said it discovered oil after a gap of four years when it resumed drilling in a new deposit in its block in the western state of Rajasthan.
U.K. lenders rallied, snapping a four-day decline. Barclays Plc led gains, jumping 3.2 percent to 286 pence. Royal Bank of Scotland Group Plc increased 2.9 percent to 273.9 pence and Lloyds Banking Group Plc rose 1.9 percent to 47.18 pence.
Persimmon Plc, Britain’s largest homebuilder, added 2.9 percent to 1,033 pence, extending this year’s advance to 29 percent. An index of U.K. house prices rose in March as transactions picked up and the outlook improved, the Royal Institution of Chartered Surveyors said in a report.
AZ Electronic Materials SA plummeted 35 percent to 240 pence, the biggest drop since its October 2010 initial public offering. The supplier of chemicals used in devices such as Apple Inc.’s iPad said earnings margins will be below normal levels this year.
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