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U.K. Stocks Rise; Next Leads Retailers Higher on Forecast

Jan. 3 (Bloomberg) -- U.K. stocks advanced, even as the FTSE 100 Index posted its first weekly decline in three weeks, as Next Plc led a rally by retailers.

Next rallied the most in almost four years after the clothing company increased its full-year profit forecast and said it will pay shareholders an additional dividend. Marks & Spencer Group Plc and Asos Plc, which both report sales this month, gained at least 3,5 percent. A gauge of commodity producers dropped for a third day as industrial metals fell.

The FTSE 100 rose 12.76 points, or 0.2 percent, to 6,730.67 at the close of trading in London as more than two stocks climbed for every one that dropped. The U.K. equity benchmark, which celebrates its 30th birthday today, has slipped 0.3 percent this week after completing its best year since 2009. The gauge still posted the second-smallest increase of developed European markets tracked by Bloomberg in 2013.

“It’s time to be a lot more selective when investing in the stock market,” said Henry Dixon, who helps oversee about $28 billion at GLG Partners LP in London. “We saw negative earnings in 2013, but a second straight year of gains in the U.K. We’re more cautious on retail because it has been very much in vogue, although Next has clearly differentiated itself and today’s trading statement is extraordinary.”

The broader FTSE All-Share Index added 0.3 percent today, while Ireland’s ISEQ Index climbed 0.9 percent. The number of shares changing hands in FTSE 100-listed stocks was 24 percent lower than the average of the past 30 days, data compiled by Bloomberg showed.

Earnings Decline

The average earnings before interest, taxes, appreciation and amortization for members of the FTSE 100 slipped 0.3 percent in 2013, according to data compiled by Bloomberg. Ebitda for the index’s constituents declined 10 percent in 2012.

Next jumped 10 percent to 6,085 pence, its highest price in at least 25 years. Pretax profit for the year ending this month will reach 684 million pounds ($1.1 billion) to 700 million pounds. The U.K.’s second-largest clothing retailer had forecast profit would not beat 680 million pounds. Next said Christmas sales rose 12 percent, exceeding the median analyst estimate for growth of 3.8 percent. The company will also pay a special dividend of 50 pence a share in February.

Marks & Spencer, which will post quarterly sales on Jan. 9, increased 3.9 percent to 444 pence. Online retailer Asos, which reports on Jan. 14, climbed 4.2 percent to 6,750 pence.

Schroders Climbs

Schroders Plc added 1.2 percent to 2,636 pence, rising for a ninth day -- its longest streak of gains since 2009. Barclays Plc upgraded its rating on the asset manager to overweight, similar to a buy recommendation, from underweight. Analysts Daniel Garrod and Toni Dang predicted stronger fund inflows.

Redrow Plc and Crest Nicholson Holdings Plc rose 2.3 percent to 326 pence and 2.7 percent to 380 pence, respectively, as a gauge of U.K. housebuilders closed at a record. Nationwide Building Society said property prices climbed 8.4 percent last year, their biggest annual increase since 2006. Prices gained 1.4 percent last month. A separate report from Markit Economics showed that Britain’s construction industry expanded for an eighth consecutive month in December, growing at a faster rate than economists had predicted.

HSBC, which accounts for 7.1 percent of the FTSE 100, slipped 0.5 percent to 656.4 pence. The bank trades at 1.08 times the projected value of its assets, more than the 1.01 average price-to-book ratio for London-listed lenders, data compiled by Bloomberg showed.

The FTSE 350 Mining Index declined 0.1 percent, completing its first weekly retreat in three weeks, as copper and base metals fell on the London Metal Exchange. Glencore Xstrata Plc dropped 1 percent to 307.5 pence while Kazakhmys Plc, which tumbled 72 percent in 2013, lost 2.9 percent to 209.8 pence.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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