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U.K. Stocks Rise as China Eases Cash Squeeze; ARM Climbs

June 25 (Bloomberg) -- U.K. stocks rose the most in four weeks as China’s central bank took steps to stabilize money-market rates and said it will do more to ease a cash squeeze.

Fresnillo Plc and Rio Tinto Group each advanced at least 1 percent as a gauge of mining companies climbed from its lowest level since July 2009. ARM Holdings Plc increased the most in two months after Investec Plc advised investors to buy the shares. Rexam Plc fell for a fifth day as it said full-year results will be lower than it previously expected.

The FTSE 100 Index gained 72.81 points, or 1.2 percent, to 6,101.91 at the close in London, its biggest gain since May 28. The equity benchmark is still heading for a 7.3 percent decline in June after the Federal Reserve signaled it may end bond buying next year if the U.S. economy improves in line with forecasts. The gauge has lost 4.8 percent so far this quarter, the most since September 2011.

“Markets have certainly been oversold, so there’s an opportunity for a rally,” Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England, said in a phone interview. “For the U.K. market, the comments from China’s central bank appear to be soothing some woes. We remain cautious over a six-month period as the economic background is improving but not earnings.”

The FTSE All-Share Index added 1.2 percent, while Ireland’s ISEQ Index rose 1.9 percent today.

PBOC Measures

The People’s Bank of China said on its website it has provided liquidity to some financial institutions and will use short-term liquidity operation and standing lending facility tools to ensure stability in money markets. The statement is the first public confirmation of central-bank action to ease a cash crunch that sent China’s overnight repurchase rate to an all-time high last week.

Elsewhere, European Central Bank President Mario Draghi said the euro-area economy’s condition still requires a loose monetary policy.

In the U.S., Minneapolis Fed President Narayana Kocherlakota, who has called for easier policy, said yesterday the central bank must emphasize policy will remain accommodative “for a considerable time” after the end of quantitative easing. He will vote next year on the Federal Open Market Committee to decide when to end bond purchases.

U.S. Economy

Orders in May for U.S. durable goods rose more than forecast, data showed. Bookings for goods meant to last at least three years climbed 3.6 percent for a second month, the Commerce Department reported in Washington. The median forecast of 81 economists surveyed by Bloomberg called for a 3 percent gain.

Fresnillo, a silver producer, climbed 1.2 percent to 898.5 pence. Rio Tinto, the second-biggest mining company, added 2.6 percent to 2,649 pence.

A gauge of mining companies listed in the FTSE 350 increased 1.3 percent, snapping four days of declines.

ARM rallied 3.6 percent to 786 pence, the biggest gain since April 23, after Investec raised its recommendation on the shares to buy from hold.

“We see ARM as the most attractive long-term investment in the sector with underpinned earnings growth,” analyst Julian Yates wrote in a note.

Aviva Plc advanced 3 percent to 329.6 pence, its biggest gain since May 16. Citigroup Inc. recommended buying the shares after Chief Executive Officer Mark Wilson made a presentation to the brokerage’s sales team. The U.K.’s second-biggest insurer will probably deliver savings of at least 400 million pounds ($618 million) a year, analyst Paul Bradley wrote in a note.

Rexam dropped 2.5 percent to 453.7 pence after saying full-year results will be “modestly lower than previously anticipated” because of slow growth in beverage-can sales. The company also said it will sell its health-care unit.

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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