U.K. stocks climbed, extending their highest level in 5 1/2 years, as merger and acquisition activity in the utility industry offset a selloff by metal producers.
Severn Trent Plc soared 14 percent after confirming that a consortium of infrastructure investors has approached it about a possible takeover. Babcock International Group Plc rallied 6.8 percent after reporting an increase in profit. Lonmin Plc sank
7.3 percent after halting operations at its Marikana mine in South Africa.
The FTSE 100 Index rose 54.3 points, or 0.8 percent, to 6,686.06 at the close in London, extending its highest level since October 2007. The equity benchmark has rallied 13 percent so far this year supported by central-bank monetary stimulus. The broader FTSE All-Share Index also gained 0.8 percent today, while Ireland’s ISEQ Index closed little changed.
“Central-bank stimulus has been extremely supportive,” Richard Hunter, head of equities at Hargreaves Lansdown Plc in London, said. “The unwinding of quantitative easing is going to be difficult, but it’s not quite on the horizon yet. That kind of support along with earnings means there is enough there to support the market.”
Severn Trent jumped 14 percent to 2,077 pence after the U.K.’s second-largest publicly traded water company said it received an approach from a group comprised of Borealis Infrastructure Management Inc., the Kuwait Investment Office and the Universities Superannuation Scheme that “may or may not lead to an offer being made.”
The Financial News reported earlier that Kuwait’s sovereign-wealth fund had formed a group to make a 5.3 billion-pound ($8.1 billion) bid for Severn Trent. That would be about 20 percent above the company’s market capitalization of 4.4 billion pounds at yesterday’s close. The magazine cited people with knowledge of the matter.
Rival utility companies Pennon Group Plc and United Utilities Group Plc advanced 4.4 percent to 695 pence and 2.8 percent to 760.5 pence, respectively.
Babcock International climbed 6.8 percent to 1,163 pence after the engineering company reported a 14 percent increase in full-year operating profit to 376.6 million pounds, boosted by overseas defense sales and nuclear energy activity. Babcock, which helps design submarines for the U.K. government, said that new contracts enabled it to grow.
BG Group Plc gained 3.5 percent to 1,227 pence after the the U.K.’s third-largest natural-gas producer said earnings will grow faster than output as it expands trading in liquefied natural gas. The company expects to sell 17 million to 20 million tons a year of LNG from 2015, with new supplies from Australia and the U.S.
ICAP Plc rallied 14 percent to 339.7 pence after the world’s largest broker of transactions between banks posted a bigger full-year profit than it indicated less than two months ago. Pretax profit before exceptional items in the year through March fell 20 percent to 284 million pounds. ICAP lowered its profit forecast on March 27 to 280 million pounds.
Lonmin tumbled 7.3 percent to 265.1 pence after the world’s third-largest platinum producer said that its miners refused to work at Marikana in the Rustenburg region of North West province. The Association of Mineworkers and Construction Union said a local organizer was shot dead in a tavern near the facility on May 11.
Lonmin said yesterday it plans to produce more than 700,000 ounces of platinum in concentrate this year. Repeated strikes last year cut the company’s output and raised costs.
A gauge of mining companies slid 0.9 percent as copper led industrial metals lower amid concern that China’s growth will slow. JPMorgan Chase & Co. lowered its forecast for gross domestic product growth in the world’s second-biggest economy in 2013 to 7.6 percent from 7.8 percent.
Anglo American Plc, which owns the largest platinum miner, dropped 1.7 percent to 1,550 pence, while Rio Tinto Group retreated 1.1 percent to 2,967.5 pence. Glencore Xstrata Plc fell 1.4 percent to 340.35 pence.
“The long-term story for the mining companies is still there,” Hunter said. “In the short term, discontent about the way the companies have been run, along with intrinsic links to commodity prices and speculative investors has made the sector quote volatile.”
Betfair Group Plc slipped 3.4 percent to 865 pence after the company said it rejected a 950 pence-per-share offer from a consortium led by CVC Capital Partners Ltd. The online gambling operator said the bid undervalued its business. CVC said today it was unable to agree financial terms with the board of Betfair and “as a result has no intention of making an offer.”
The volume of shares changing hands in FTSE 100-listed companies was 7.6 percent lower than the average of the past 30 days, data compiled by Bloomberg showed.