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U.K. Stocks Rise for 10th Day on Bank of England Forecast

May 15 (Bloomberg) -- U.K. stocks climbed for a tenth day, extending gains to the highest level since October 2007, as the Bank of England raised its second-quarter growth forecast.

EasyJet Plc increased to the highest level since the carrier sold shares to the public in November 2000 after saying it expects an improvement in full-year profitability. London Stock Exchange Group Plc advanced 5.3 percent after reporting annual profit that beat analysts’ estimates. Kazakhmys Plc and Randgold Resources Ltd. paced a decline in mining shares.

The FTSE 100 Index gained 7.49 points, or 0.1 percent, to 6,693.55 at the close in London, for the longest streak of gains since July 2009. It has surged 13 percent this year as central banks maintained stimulus measures. The broader FTSE All-Share Index added 0.2 percent today, while Ireland’s ISEQ Index jumped 1 percent.

“The BOE report was surprisingly optimistic, with a projected uplift in the growth rate for the second quarter,” said Espen Furnes, who helps oversee $75 billion as a fund manager at Storebrand Asset Management in Oslo. “This is somewhat at odds with the current market sentiment, so should be taken well by financial markets.”

Seven FTSE 100 companies, including Royal Dutch Shell Plc, J Sainsbury Plc and Wm Morrison Supermarkets Plc, traded without the right to dividends today, shaving 9.63 points off the equity benchmark.

U.K. Economy

The Bank of England raised its forecasts for economic growth and said it may reach its target of 2 percent inflation faster than previously estimated. The central bank expects that gross domestic product will expand 0.5 percent this quarter after increasing 0.3 percent in the first three months of the year, according to its quarterly Inflation Report.

A U.K. recovery is now “in sight,” Governor Mervyn King said in his last report before Bank of Canada Governor Mark Carney takes over his role in July.

The German economy expanded less than forecast in the first quarter and France’s slipped into recession, separate data showed today. Gross domestic product in Europe’s largest economy rose 0.1 percent from the fourth quarter, when it fell a downwardly revised 0.7 percent, the Federal Statistics Office in Wiesbaden said. Economists had forecast a 0.3 percent gain.

The 17-nation euro-area economy contracted 0.2 percent in the first quarter, after a 0.6 percent decline in the final quarter of 2012, the European Union’s statistics office in Luxembourg said. That’s the sixth straight quarterly contraction. Economists had predicted a 0.1 percent decrease.

U.S. Output

In the U.S., a Federal Reserve report showed industrial production fell in April by the most in eight months. Output at factories, mines and utilities decreased 0.5 percent, after gaining a revised 0.3 percent in March. Economists on average had forecast a drop of 0.2 percent.

The number of shares changing hands in companies on the FTSE 100 was 3.7 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.

EasyJet surged 8.3 percent to 1,224 pence after saying it will deliver improved returns and profitability in the full year after a drive to secure more business travelers helped pare fiscal first-half losses. Revenue per seat will probably gain 4 percent in the second half to Sept. 30, it said.

LSE rose 5.3 percent to 1,406 pence, the biggest advance since November, after the operator of Europe’s oldest independent bourse posted full-year net income of 217 million pounds ($331 million), beating the 204.1 million-pound average estimate of analysts surveyed by Bloomberg.

New Collection

Marks & Spencer Group Plc advanced 3.7 percent to 436 pence after announcing its autumn-winter fashion collection.

ITV Plc dropped 1.9 percent to 129.2 pence after the commercial television station said net advertising revenue from its channels will be 3 percent lower in the first half.

“While we are cautious about the outlook for TV advertising for 2013, our objective remains to outperform the market over the full year,” CEO Adam Crozier said in a statement.

A gauge of mining stocks in the FTSE 350 Index fell 1.4 percent for a fourth day of losses.

Kazakhmys retreated 4.3 percent to 351.9 pence and Randgold Resources declined 3.8 percent to 4,800 pence.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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

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