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U.K. Stocks Rally to Five-Week High on Bernanke’s Pledge

July 11 (Bloomberg) -- U.K. stocks advanced to a five-week high after Federal Reserve Chairman Ben S. Bernanke said the central bank’s monetary policy will remain supportive of economic growth for the foreseeable future.

African Barrick Gold Plc and BHP Billiton Ltd. led mining companies higher. Balfour Beatty Plc gained 2.8 percent after it said full-year results will be in line with its expectations. Associated British Foods Plc jumped 5.1 percent as third-quarter sales increased.

The FTSE 100 Index rose 38.45 points, or 0.6 percent, to 6,543.41 at the close of trading in London. The gauge has rallied 2.6 percent so far this week. The FTSE All-Share Index climbed 0.6 percent today, while Ireland’s ISEQ Index slipped less than 0.1 percent.

“Expectations are growing that stimulus is returning, which can lead investors to detour from tapering talk and feel safer that Bernanke will support asset prices moving forward,” Daniel Weston, a portfolio manager at Aimed Capital Management LLC in Munich, wrote in an e-mail.

Bernanke said yesterday that the Fed may keep interest rates low even after unemployment falls to 6.5 percent from 7.6 percent in June. The central bank will take into account low inflation and the possibility that the jobless rate may understate labor-market weakness, he said in Cambridge, Massachusetts.

“There is some prospective, gradual and possible change in the mix of instruments, but that shouldn’t be confused with the overall thrust of policy which is highly accommodative.”

Bernanke said last month that the Fed may pare $85 billion of monthly bond purchases this year and end them by mid-2014 if the economy improves in line with its forecasts.

Precious Metals

African Barrick Gold, a producer of the metal in Africa, jumped 13 percent to 111 pence. Polymetal International Plc, which operates mines in Russia and Kazakhstan, rallied 8.3 percent to 519 pence. Fresnillo Plc surged 13 percent to 1,018 pence, its largest gain since July 2009. Gold and silver climbed for a fourth day.

BHP Billiton, the world’s biggest commodity producer, rose 4.6 percent to 1,800 pence, while Rio Tinto Group, the second-largest, advanced 4.6 percent to 2,833.5 pence. A gauge of London-listed mining companies soared 4.6 percent.

Balfour Beatty increased 2.8 percent to 225.7 pence. The U.K.’s largest construction company said it expects its second-half to be more profitable than the first half ended June 28, leading to full-year results in line with its expectations.

Ashmore Inflows

Ashmore Group Plc gained 7.1 percent to 376.7 pence, rising for a fourth day. The fund manager that invests in emerging markets said the net inflow of investments from its customers was $4.5 billion, which partly offset a drop of $4.8 billion in portfolio value. As a result, the assets under management at the end of June totaled $77.4 billion, compared with $77.7 billion in the previous quarter.

Associated British Foods climbed 5.1 percent to 1,907 pence. The company said third-quarter revenue rose 8 percent as sales at its Primark clothing outlets offset a decline at the sugar business.

Hays Plc advanced 5.2 percent to 99.9 pence, its sixth day of gains. The U.K.’s largest professional-recruitment agency said net fees on a comparable basis increased 1 percent in the quarter ended June from the same period last year.

G4S Plc, the world’s largest security provider, lost 5.6 percent to 213 pence, its lowest price since August 2009. The U.K. government referred the company to the Serious Fraud Office, saying it overcharged for electronic-tagging services, including claims for monitoring dead people.

Serco Group Plc tumbled 7.9 percent to 626.5 pence, dropping the most since October 2008. The company agreed to an audit of all its contracts with the government after irregularities were found over payments to it and G4S for tagging prisoners released on license and defendants freed on bail, Lord Chancellor Chris Grayling said. The SFO was asked to investigate G4S after the company refused to cooperate with an audit, Grayling said.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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

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