Most U.K. stocks advanced, with the benchmark FTSE 100 Index completing its second-biggest weekly rally this year, on optimism that central banks around the world will continue to support their economies.
Invensys Plc surged 15 percent after saying Schneider Electric SA offered about 3.3 billion pounds ($5 billion) to acquire the company. Phoenix Group Holdings jumped 10 percent after saying it is in talks to combine with Swiss Re Ltd.’s Admin Re unit. London-listed mining companies fell after Chinese Finance Minister Lou Jiwei signaled the world’s second-largest economy may expand less than the target this year.
The FTSE 100 Index rose 1.53 points, less than 0.1 percent, to 6,544.94 in London, as three stocks rose for every two that fell. The gauge increased 2.7 percent this week, extending its rally this year to 11 percent. The FTSE All-Share Index also climbed less than 0.1 percent today, while Ireland’s ISEQ Index added 0.4 percent.
“There’s a feeling now that maybe a little more risk-on is appropriate,” said Tim Rees, who helps oversee 255 billion pounds at Insight Investment Management Ltd. “Perhaps the Fed has been making people confused about its short-term policies, but the good point is that the market overall has agreed that there’s life after quantitative easing. The question for equities now is not whether to invest, but where to invest.”
Stocks rallied around the world yesterday as Federal Reserve Chairman Ben S. Bernanke said the central bank’s policy would remain “highly accommodative.” The Bank of Japan also indicated this week it will maintain stimulus. The European Central Bank and Bank of England said last week they will keep key interest rates low for the foreseeable future.
European Central Bank executive-board member Vitor Constancio said Europe needs accommodative monetary policy for a longer period as it trails the U.S. in economic recovery and inflation risks.
ECB’s pledge to keep interest rates low has been “successful in stabilizing financial markets unduly affected by spillovers from the recent Fed announcement of future tapering of quantitative easing,” he said in a speech in Singapore.
Invensys surged 15 percent to 508 pence, its biggest increase since November. Schneider, the French electrical-equipment maker, is offering to pay 505 pence a share, comprising 319 pence in cash and 186 pence in new stock, the London-based engineering company said.
Phoenix Group jumped 10 percent 719 pence, its highest price since September 2010, after starting talks for merging with Admin Re. The insurer said that if talks are successful, Swiss Re would take a minority stake in the company as payment.
Prudential Plc gained 0.7 percent to 1,118 pence after Nomura Holdings Inc. raised its rating on the stock to buy from reduce, citing the insurer as its “top pick” in the industry. The brokerage said strong cash flow could boost dividend growth.
A gauge of commodity producers slipped 1.3 percent as Rio Tinto Group and Anglo American Plc lost 1.2 percent to 2,799 pence and 3.2 percent to 1,294.5 pence, respectively. China’s Lou said that while the government in March set a 2013 growth goal of 7.5 percent, he is confident of achieving a 7 percent rate.
Reckitt Benckiser Group Plc slipped 5.1 percent to 4,677 pence. CVS Caremark Corp. removed the film version of the company’s opioid-dependency drug Suboxone from its list of covered medications. This prompted Credit Suisse Group AG to cut its earnings estimate for the company by 5 percent for 2014 and by 10 percent for 2015.