U.K. stocks advanced, following two weeks of losses, as Aberdeen Asset Management Plc surged and a gauge of banks rose for a third day.
Aberdeen jumped the most since December 2008 after agreeing to buy Scottish Widows Investment Partnership from Lloyds Banking Group Plc. Standard Chartered Plc and Lloyds each gained more than 1 percent. Petrofac Ltd tumbled 17 percent after forecasting “flat to modest” profit growth for 2014. Aveva Group Plc dropped 7.8 percent after saying sales at its software-consulting unit will be lower than prior projections for the financial year.
The FTSE 100 Index added 30.02 points, or 0.5 percent, to 6,723.46 at the close of trading in London. The benchmark slipped 0.2 percent last week as the Bank of England said unemployment may reach its threshold to consider interest-rate increases sooner than forecast. The broader FTSE All-Share Index gained 14.73 points today, or 0.4 percent, while Ireland’s ISEQ Index slid 0.6 percent.
“Liquidity appears to be the primary tailwind for equity markets in the short term,” Ronan Carr, an equity strategist at Morgan Stanley in London, said in a report today. “As long as equity fund flows are positive and accelerating, equity market valuations tend to increase. Seasonality is supportive also, even more so given the strong returns year-to-date.”
The FTSE 100 is trading at 13.8 times projected earnings, its highest valuation since the end of 2009. The equity benchmark has rallied 14 percent so far this year as central banks pledged to maintain stimulus measures for as long as needed. The number of shares changing hands in FTSE 100-listed stocks was 19 percent lower than the average of the past 30 sessions, data compiled by Bloomberg showed.
Aberdeen rallied 15 percent to 489.7 pence, its highest price since May. Lloyds will receive a 9.9 percent stake in Aberdeen, the bank said today, valuing the deal at about 560 million pounds ($901 million) based on last week’s closing price. Aberdeen’s assets will increase to 336 billion pounds, pushing it ahead of Schroders Plc as Europe’s biggest publicly-traded fund manager.
Lloyds added 1.1 percent to 76.17 pence. Aberdeen will also begin to manage assets on behalf of the bank, and will pay Lloyds up to an additional 100 million pounds in cash over five years, depending on the performance of that venture.
Standard Chartered rose 1.8 percent to 1,482 pence, leading the FTSE 350 Banks Index to a three-day rally.
Petrofac tumbled 17 percent to 1,200 pence, the oil and gas engineer’s biggest decrease in more than eight years, extending its loss this year to 26 percent. Chief Financial Officer Tim Weller said the company may now need to post a profit jump of about 30 percent from 2014 to 2015 to meet its 2015 target of $862 million in post-tax income.
Aveva dropped 7.8 percent to 2,365 pence, its biggest slump in four months. Sales growth of 5 percent at its Enterprise Solutions business for the six months ending Sept. 30 was slower than expected, according to a statement. This will lead to full-year revenue that is “broadly in line” with last year for the unit, the company said today.
Capita Plc slipped 0.6 percent to 977 pence, paring earlier losses of as much as 5.9 percent, after saying Paul Pindar will step down as chief executive officer from February next year. His departure is a “disappointment” as he was “instrumental” to the company’s success, Liberum Capital said in a note.